Singapore economy expands in Q4

Powered by rising production of computer chips, disk drives and pharmaceuticals, Singapore's economy expanded for a second straight quarter, but the momentum is slowing.

Official data released Friday showed gross domestic product grew at an annualised rate of 7.9 per cent in the fourth quarter -- weaker than the market's median expectation for an 11.2 per cent rise.

The fourth-quarter estimate, flagged by Prime Minister Goh Chok Tong on Wednesday, was weaker than a brisk 17.3 per cent annual expansion rate in the third quarter, when the trade-reliant economy rebounded from a SARS-induced slump.

"You have your key manufacturing sector doing okay. As we move into the first quarter, probably you'll get the typical slowdown in orders," said Joseph Tan, an economist at British investment bank Standard Chartered.

"But overall there's no reason to be overly pessimistic because at this point in time we are still seeing some strong numbers coming through from the US," he said.

The Ministry of Trade and Industry, which released the data, said Singapore's 2004 growth would be between three and five per cent -- in line with market forecasts.

For 2003, Singapore's $89 billion economy grew 0.8 per cent, the slowest among Asia's major economies. That reflected the fallout from an outbreak of the Severe Acute Respiratory Syndrome virus that emptied nine out of every 10 hotel rooms, dried up tourism and slowed factory orders.

The 2004 growth outlook could pave the way for Goh, prime minister since 1990, to hand power to Deputy Prime Minister Lee Hsien Loong. Goh said last week he would be comfortable making way for Lee -- son of founding prime minister and elder statesman Lee Kuan Yew -- if the economy were growing at three to four per cent.

Growth in 2003 was about half the pace of 2002, and manufacturing investment commitments in the year were S$500 million ($294 million) short of the government's 2003 target of S$8.0 billion, official data showed.

Singapore has already recovered sharply, growing at its fastest pace in eight years in the July to September quarter, following the end of an outbreak of SARS which killed 33 people and battered tourism from March to May.