Singapore's industrial production fell for a second month in May, the first back-to-back decline since 2009, after pharmaceutical and electronic manufacturers reduced output as global demand eased.
Manufacturing, which accounts for about a quarter of the economy, fell 17.5 percent in May from a year earlier after a 9.5 percent drop in April, the Economic Development Board said in a statement today. That was more than the median estimate of 11 economists surveyed by Bloomberg News for a 9.3 percent decline.
Europe's debt crisis and slowing U.S. growth are damping demand for exports from Asia, which may curb expansion in a region that has led the global economic recovery. Exports by Singapore companies such as electronics manufacturing services provider Venture Corp. are predicted by the government to grow in 2011 at about a third the pace of last year, when overseas shipments jumped the most since 2003.
"It's hard to decouple fully from the external economies of the U.S. and E.U. because that's where most of the major export markets lie," Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore, said before the report. "The technology sector seems soft, but we think it should pick up in the second half of this year, although a great rebound is not expected."
IMF Forecast
Last week, the International Monetary Fund cut its forecast for U.S. growth in 2011 for the second time in two months, warning that further setbacks to the recovery pose growing threats to the world economy, along with potential contagion from the European debt crisis.
Industrial production fell a seasonally adjusted 3.8 percent in May from April, when it dropped a revised 18.7 percent from the previous month, today's report showed.
Electronics production decreased 5.4 percent from a year earlier after declining a revised 7.6 percent in April. Pharmaceutical output fell 43.2 percent.
Manufacturing will probably increase 8 percent in 2011, according to the median estimate of 21 economists in a survey by the Monetary Authority of Singapore released on June 8.
Singapore's exports rebounded in May as drug companies shipped more goods to customers, making up for a slump in electronic sales. The performance of Singapore's pharmaceutical industry is volatile because production swings by companies such as Sanofi-Aventis SA can cause industrial output to fluctuate from month to month.
The IMF predicts developing Asian economies will expand 8.4 percent this year, compared with a growth rate of 2.2 percent in advanced nations.
"The Asian growth story is still relatively intact, which means Singapore's manufacturing sector will be relatively resilient," Pay Shuzhen, a Singapore-based economist at Australia & New Zealand Banking Group Ltd., said before the report. "We expect electronics output to pick up as China's domestic indicators remain relatively robust."
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