Singapore Joins Asia Manufacturing Revival

Singapore’s manufacturing rose for a second month in May as pharmaceutical production more than doubled amid signs a severe recession is loosening its grip on the Southeast Asian city-state.

Industrial production rose 2 percent from a year earlier and fell a seasonally adjusted 1.6 percent from April, the Trade and Industry Ministry said Friday. Manufacturing rose a revised 0.4 percent in April after falling the previous six months.

Production of pharmaceuticals, which account for 20 percent of Singapore’s industrial production, soared 140 percent in May while electronics, 26 percent of manufacturing, slid 22 percent and chemicals fell 17 percent.

Singapore is the latest Asian economy to show signs of stabilization in the second quarter after severe drops in the previous two quarters. Manufacturing in Taiwan, South Korea and China has improved in recent months.

But while the slump may be bottoming out, an economist warned that the outlook is still far from rosy.

“A valid reason for caution in Singapore is the fact that so much of the strength reflects the performance of the highly volatile pharmaceutical sector,” said Robert Prior-Wandesforde, senior Asia economist at HSBC in Singapore.

“One could argue that all we are seeing is a normalization after a terrible couple of years.”

Singapore’s economy, which relies on exports, finance and tourism, plunged a seasonally adjusted, annualized 14.6 percent in the first quarter after a 16.4 percent drop in the fourth quarter.

The government expects the economy to shrink up to 9 percent this year, the worst recession since independence from Malaysia in 1965.

Tourism also remains mired in a slump. The Singapore Tourism Board said Friday that arrivals dropped 13 percent to 725,000 in May from 834,000 a year earlier. Arrivals in May fell 6.9 percent from April.

The board said hotel revenue fell 38 percent to 112 million Singapore dollars ($77 million) in April from SG$180 million a year earlier.

The average hotel room rate fell to SG$184 in May, down 26 percent from a year earlier.

6/26/2009 2:29 AM ALEX KENNEDY Associated Press Writer SINGAPORE