SINGAPORE (AFP) — Singapore's industrial sector in May performed worse than expected, raising concerns the economy may miss the government's 4.0-6.0 percent annual growth target, economists said Thursday.
The Economic Development Board's monthly report showed output from the industrial sector shrank an annual 12.8 percent last month, pulled down by a hefty 55.1 percent drop in biomedical output.
Analysts had projected a fall of 2.5 percent for May.
On a seasonally adjusted basis, industrial output in Southeast Asia's most advanced economy last month fell 5.7 percent from April, the EDB said.
"Production in May dropped 12.8 percent compared to the same month last year, largely due to a contraction in the biomedical manufacturing cluster," said the EDB.
The sharp plunge in biomedical output was due mainly to the pharmaceuticals segment which shrank 58.2 percent because a different batch of ingredients was produced, it said.
Precision engineering also declined last month with output down 4.8 percent on the year but other sectors fared better. EDB reported increased output in electronics, chemicals and transport engineering.
Electronics output gained 3.8 percent in May. Almost all electronics segments recorded higher production but information and communications, and consumer electronics were exceptions, the EDB said.
Chemicals production was up 2.2 percent and transport engineering increased 13.0 percent, boosted by the robust marine and offshore engineering industries, it said.
Song Seng Wun, a regional economist with CIMB-GK brokerage, said the May industrial figures were bad news for second-quarter economic growth and probably indicated "overall GDP is outside the 4.0-6.0 percent government economic growth forecast for 2008."
Citigroup's Singapore economist Kit Wei Zheng said full-year growth for 2008 was likely to be less than five percent because the May production figures indicated a broad slowdown in the industrial sector.
"The bottom line is, the broader trend of slowdown in the manufacturing sector is still intact," he told AFP.
Singapore's monthly manufacturing report is widely monitored as the sector accounts for a third of Singapore's gross domestic product worth 243 billion Singapore dollars (179 billion US) in 2007.
The city-state's export-reliant economy grew slower than estimated in the year's first quarter, at 6.7 percent, as demand weakened due to a slowdown in the United States and other key markets, the government has said.
- Dow Jones Newswires contributed to this story -
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