Singapore's Economy Slows on Cooling Measures

Singapore's economy grew at an annualized, seasonally adjusted rate of 4.3 percent in the third quarter, well below market expectations for 6.4 percent, as a series of government cooling measures and the impact of the subprime crisis took hold.

But the trade ministry on Monday slightly increased its forecast for 2008, with growth seen at 4.5-6.5 percent, above its previous forecast of 4-6 percent. The forecast range for 2007 was
narrowed to 7.5-8 percent from 7-8 percent.

"Growth is much weaker than what was expected. It seems like the downward adjustment is coming from the manufacturing side. The property measures introduced by the government must have moderated the services growth as well," Chua Hak Bin, an economist at Citigroup said.

The final government data for the third quarter compares with an advance estimate -- based largely on data from July and August -- of 6.4 percent issued last month.

"The lingering effects of the sub-prime problems in the credit markets and a more generalized weakening of the housing market will dampen consumption in the US," the ministry said.

From a year ago, the city-state's economy expanded by 8.9 percent in the three months to the end of September, compared with an advance estimate of 9.4 percent.

Earlier this month, the Singapore government delayed about S$2 billion (US$1.4 billion) worth of building projects in the city-state to 2010 and beyond to cool Singapore's booming construction sector.

The government last month also withdrew a scheme that allowed property buyers to delay payments for homes in a bid to cool the property market.

The median of a Reuters poll showed that economists had expected third-quarter growth to match the government's advance estimates.

Manufacturing expanded 10.5 percent in the third quarter from a year earlier, while construction grew 17.7 percent.

The financial services sector grew 19.9 percent, partly due to a strong performance in financial services such as private banking and asset management.