Singapore braces for sharply slower growth in 2012

"This does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies," the Ministry of Trade and Industry (MTI) said in a statement.

"Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it added.

Singapore's open and trade-dependent economy is regarded as a bellwether for Asia's exporters.

The MTI said it expects Singapore's electronics industry and other sectors that rely heavily on overseas orders to remain under pressure despite support from Asia's better-performing economies.

"Although resilient domestic demand in emerging Asia will provide some support to global demand, it will not fully mitigate the effects of an economic slowdown in the advanced economies," the MTI said.

Even the financial-services sector will be affected by heightened uncertainties in the external environment, it added.

The MTI's forecast came as data released separately Monday by the trade promotion body International Enterprise Singapore showed electronics exports already tumbling 17 per cent in the third quarter from a year ago.

Singapore's economy, valued at Sg$284.6 billion ($219 billion) in 2010, grew a record 14.5 per cent that year as it recovered strongly from a recession in 2009 when economic output shrank 0.8 per cent.

The MTI's downbeat projections for 2012 came as it released third-quarter figures showing gross domestic product (GDP) grew an annual 6.1 per cent, an improvement from 1.0 per cent in the second quarter.

The city-state is a significant producer of high-end telecommunications and computer-related parts shipped to the rest of the world as well as petrochemical and pharmaceutical products.

"Within the manufacturing sector, the electronics cluster is expected to register a lower level of output given the downturn in the global electronics cycle," the MTI said.

"This in turn will have knock-on effects on the precision engineering cluster and wholesale trade."