Singapore says growth faces headwinds, but no forecast changes yet

SINGAPORE: Singapore is reviewing its 2011 GDP forecasts but expects no big adjustment despite global sluggishness and its own economy slowing in the second quarter, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam was quoted as saying on Sunday.

Singapore announced last week that GDP contracted a seasonally adjusted, annualised 7.8 percent quarter-on-quarter in the April-June period, leading some economists to say the government's 5-7 percent GDP growth forecast for the full year may be difficult to achieve

"We review it every quarter and we are reviewing it now as well," Tharman said, referring to the forecast.

"I don't think we will see significant adjustment because what was a dominant factor in the second quarter results were the temporary factors," he was quoted as saying by the local Sunday Times newspaper.

The second quarter figures were dragged down by a fall in manufacturing, especially in the volatile pharmaceutical sector.

Nevertheless, Tharman said Singapore would be affected by sluggishness in the global economy.

"Things are not looking better in Europe," he said. "They are still kicking the can down the road and unless the problems are being resolved decisively, confidence is going to keep ebbing."

About the United States, he said: "Corporates are not investing in the way they should at this stage of the recovery."

Singapore, he said, will be affected by these sevents.

"I don't think we will get a repeat of the Lehman crisis," Tharman said, referring to the collapse of the US bank at the start of the 2008 global financial crisis.

"But we have to expect some mini-shocks from time to time that will affect confidence."

Copyright Reuters, 2011