Singapore manufacturers more glum on outlook

SINGAPORE, April 30 - Singapore manufacturers have turned more gloomy on business prospects for the next six months, a government survey showed on Wednesday, reflecting weaker economic growth in its key U.S. and European export markets.

Economies across Asia are bracing for a slowdown this year as the United States, the region's largest export market, teeters on the brink of a recession. Data showed on Wednesday that manufacturing activity in Japan slipped to a five-year low in April [ID:nT261540]

Overall, a net weighted 7 percent of Singapore manufacturers said they expect business conditions to deteriorate in the April to September period, the Economic Development Board said in a statement, compared to the previous survey in January when 2 percent expected improving business outlook.

"Increasingly, we are seeing softer numbers coming out of Europe," said Vishnu Varathan, an economist at Forecast. "Asia will not be exempted from the headwinds in the global economy."

Manufacturing accounts for about a quarter of Singapore's $180-billion economy. Most of the output is exported, a third of which is ultimately sold to consumers in the United States and Europe.

Sentiment in biomedical manufacturing, which accounts for a quarter of Singapore's total manufacturing output, was the most negative, with a net weighted 44 percent expecting activity to drop in the next two quarters.

A net weighted 8 percent of manufacturers in the electronics industry, which produces a third of Singapore's factory output, expect business to deteriorate.

"The electronics sector is most vulnerable to soft global demand and many are wary that the sector will extend its slump," Varathan said.

In comparison, general manufacturing, which includes printing, tobacco, food and beverages, was the most upbeat, with a net weighted 11 percent expecting businesses to improve.

Price competition from abroad and a stronger Singapore dollar were among factors cited by manufacturers as possibly capping export orders in the next six months.

Singapore's economy grew at an unexpectedly strong annualised rate of 16.9 percent after seasonal adjustments in the first quarter, lifted by a recovery in pharmaceutical production. The government expects the economy to grow between 4-6 percent this year, barring a sharp downturn in the United States.

Economists expect manufacturing growth to slow to this year, dragged by a stumbling U.S. economy. Growth halved to 5.8 percent last year from 11.9 percent in 2006.

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