SEO Version
ANNUAL REPORT 2011
33
1.0 Economic Overview
1.1
Gross Domestic Product Growth
Singapore’s economy performed relatively well in 2011,
given the high Gross Domestic Product (“GDP”) growth
of 14.5% in 2010, supply-side disruptions from the
March 2011 Japan earthquake and the subsequent
Fukushima nuclear fallout, a downgrade in the US
credit ratings in August 2011, as well as a reduction
in spending due to the unfolding of the Eurozone debt
crisis. Advance estimates from the Ministry of Trade and
Industry in January 2012 indicate that real GDP growth
for Singapore in 2011 was 4.8% (Figure 1.1).
Figure 1.1
Real GDP Growth and Inflation Rate
Real GDP Growth
Inflation Rate
Average GDP Growth between 2002 and 2011:6.3%
Average Inflation Rate between 2002 and 2011:2.1%
Source: MTI, MAS, Oxford Economics, DTZ Consulting, February 2012
Activity in Singapore’s manufacturing and trade-related
sectors is likely to be weaker in 2012. While the MTI
envisages some pickup in the economy in H2 2012,
overall GDP growth in 2012 is expected to be modest,
at 1% to 3%
(1)
.
1.2
Inflation
Singapore’s inflation, as measured by the Consumer
Price Index (“CPI”), was 5.2% in 2011, higher than the
2.8% in 2010. Given the modest economic growth
forecast for 2012, the MAS expects inflation to be about
2.5% to 3.5% in 2012.
1.3
Sectoral Performance
Singapore’s manufacturing sector is an important
demand driver of factory space and constitutes a
significant portion of the economy. The manufacturing
sector grew by 6.9%
(2)
in 2011, a marked slowdown
from the 29.7% growth in 2010 (Table 1.1). This was
due in part to the Japan earthquake and the floods in
Thailand disrupting the supply chain, causing a reduction
in output, especially in the electronics industry cluster.
There was also a pull-back in the growth of biomedical
manufacturing cluster in H2 2011. This was further
exacerbated by the sluggish US economy and the
Eurozone debt crisis, resulting in weak manufacturing
performance overall.
The transport and storage sector has enjoyed steady
growth. The sector grew between 4.2 – 4.9 % year-
on-year (“YOY”) in the first three quarters of 2011, a
testament to the contribution of Singapore’s logistics
industry to the economy. Conversely, the YOY growth
of the wholesale and retail trade sector has been
contracting since 2Q 2010. This indicates that the
logistics industry will likely assume a greater role in the
demand for warehouse space.
Table 1.1
Growth Rates of Sectors Driving the Industrial Property Market
Sectors
(At 2005 Market
Prices)
2010 YOY % Change
2011 YOY % Change
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Manufacturing
29.7
6.9
(2)
37.2
45.2
13.7
25.5
15.8
-6.0
13.4
6.52
Transport and
Storage
6.0
-
6.6
8.5
5.2
3.8
4.9
4.4
4.2
-
Wholesale and
15.1
-
Retail Trade
16.9
18.9
14.4
10.8
5.0
0.2
-0.2
-
Source: MTI, DTZ Consulting, February 2012
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
Real GDP Growth (%)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012F
2013F
2014F
2015F
(1) The GDP growth forecast from MTI does not factor in downside risks to growth, such as an exacerbation of the Eurozone debt crisis and a
significant slowdown in China’s economy. Accordingly, Singapore’s economic performance in 2012 will come in lower than expected, should
these risks materialise.
(2) Advance estimates.
Independent Market Study
by DTZ Debenham Tie Leung (SEA) Pte Ltd
Powered by FlippingBook Publisher