Factory output fall fuels Singapore recession fears

A surprise 5.0 per cent fall in Singapore's industrial output fuelled fears on Monday that the city-state's SARS-hit economy could slip into recession.

Factory production in April fell 5.0 per cent from a year earlier, reversing the 6.6 per cent growth posted the previous month, the Economic Development Board (EDB) said.

On a seasonally adjusted month-on-month basis, April factory output shrank 7.2 per cent, it said in a statement.

Economists polled by financial newswire AFX-Asia had projected industrial output would grow 3.5-4.6 per cent after the expansion in March.

The manufacturing sector was hurt by declines in electronics, transport, precision engineering and general manufacturing industries, the EDB said, without mentioning the Severe Acute Respiratory Syndrome (SARS) outbreak.

Economists said the April figures highlighted the fragility of the local economy, which has suffered since SARS struck here in March.

"We are on a razor edge if you like. We are in a situation where we are either barely positive or barely negative," Sailesh Jha, DBS Bank's senior regional economist for Asia, told AFP.

"It is just a question of how soft things will get in the second quarter."

Jha said the impact of SARS on manufacturing would be more apparent in the May production figures and predicted Singapore's economy would grow just 0.3 per cent in the June quarter

The SARS outbreak has particularly hurt Singapore's tourism and transport-related sectors, and forced the government to lower this year's growth targets to 0.5-2.5 per cent.

GK Goh Securities regional economist Song Seng Wun was also pessimistic following the release of the manufacturing figures.