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     FrontPage Edition: Sat 18 Feb 2006

Performance of Singapore economy in  2005



Overall Performance
Economic activity in Singapore continued to pick up pace in 4Q05. Compared to the same quarter a year earlier, real GDP rose by 8.7%, up from 7.6% in 3Q05.
The economy also showed strong momentum with 4Q05 annualised quarter-on-quarter growth reaching 13%. This brought full-year real GDP growth in 2005 to 6.4%1.
The improvement over the advance estimate of 6.0% is mainly due to the better-than-expected growth in manufacturing activity.

Sources of Growth
Total demand rose by 9.1% in 2005, moderating from the 18% recovery momentum in 2004.
External demand, up by 11%, provided much of the growth impetus. This reflected contributions mainly from exports of IT and telecom products.
Among services exports, most important were business services, financial services, transport and travel. Growth of domestic demand, at 2.6%, reflected mainly higher public consumption and private consumption on cars, medical care and rentals.
Investment spending ¨C both public and private ¨C fell during the year. This reflected mainly the weaker building activity in the residential segment, as well as fewer aircraft purchases.
Sectoral Performance
All major economic sectors showed positive growth momentum in 4Q05. Apart from construction, all sectors also registered stronger levels of activity compared to a year ago both in 4Q05 and for 2005 as a whole. (See Annex).

THE MANUFACTURING SECTOR grew by 14% in 4Q05, following a gain of 13% in 3Q05.
The electronics cluster expanded by 19% in 4Q05, driven by strong performances in semiconductors and computer peripherals. Biomedical production rose by 7.6% while chemicals production grew by 2.6%.
Transport engineering posted strong gains of 35%, supported by marine and offshore engineering while precision engineering rose by 12%.
The improvement in manufacturing output brought annual growth to 9.3% in 2005 compared with 14% a year earlier.

CONSTRUCTION SECTOR activity accelerated in 4Q05, registering positive growth on a quarter-on-quarter basis. Nevertheless, activity remained 0.8% below the level a year ago, compared with a decline of 1.4% in 3Q05.
In the quarter, the continued growth in private sector activity was offset by the reduction in public sector activity. For 2005, the annual rate of decline eased to 1.1% from 6.1% a year earlier.

THE WHOLESALE AND RETAIL TRADE SECTOR expanded by 12% in 4Q05, an improvement over the previous quarter¡¯s 11%.
This was due to a sharp acceleration in non-oil reexports, which more than offset a moderation in growth of retail sales from 10% to 8.0%.
The decline in retail sales largely reflected a slowdown in car sales. Excluding cars, retail sales growth slowed from 8.2% to 7.3%. Over the year 2005, the wholesale and retail trade sector registered growth of 10%, a slowdown from the 16% in 2004.

THE HOTELS AND RESTAURANTS SECTOR grew by 6.2% in 4Q05, up from 4.7% in the previous quarter.
Both hotels and restaurants turned in comparable growth in the quarter, boosted by continued growth in visitor arrivals. They helped to maintain high levels of occupancy at hotels and allowed hoteliers to raise average room rates in the quarter.
For the year 2005, the sector grew by 4.6%, in contrast to the sharp 11% rebound from SARS in the previous year.

Source: Press Release 16 Feb 2006

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