SINGAPORE - Business conditions improved in the fourth quarter of 2012, according to the latest BT-UniSIM Business Climate Survey, which forecasts GDP growth of 2.2 per cent to 2.5 per cent in the first quarter of this year.
The number of firms reporting a contraction in sales in Q4 held around the same level as Q3 while new orders improved across the board. But more firms - especially large and foreign ones - saw lower profits, with more posting a profit decline of up to 10 per cent, revealed the quarterly survey ahead of final GDP figures for Q4-12 due to be released later this month.
The 161 firms polled in January reported that Q4 business activities picked up as the economy grew 1.1 per cent year-on-year and 1.8 per cent quarter-on-quarter, going by the official advance estimates.
Currently in its 18th year, the survey's forecast of GDP growth of 2.2 per cent to 2.5 per cent in the first quarter of this year, "implies a pick-up in growth and a stronger expansion than in the same quarter a year ago", when GDP growth worked out to 1.5 per cent. The forecast is in line with that of Mizuho Corporate Bank, which sees GDP growth clocking 2.4 per cent in Q1-13.
The improvement in the purchasing managers' index (PMI) for January, if maintained, corresponds to a pick-up in Q1 GDP, noted senior economist Vishnu Varathan. Singapore's PMI for January rose to 50.2, crossing the 50-point mark that signals an expansion.
However, United Overseas Bank (UOB) expects GDP growth of 1.7 per cent in Q1-13 and 2.5 per cent in Q2-13, before gathering pace to 3.8 per cent in Q3-13 and 4 per cent in Q4-13.
"Our manufacturing industries are still bogged down by the weakness in the electronics clusters. We see a turnaround by the second half of the year, spilling over to the services sectors as well. In fact, our North Asian neighbours have been performing well over the past months and although lagging, our manufacturing activity will pick up very soon," said UOB economist Francis Tan, cautioning, however, that there are downside risks from external factors.