07/26 07:00 Singapore June Factory Production Posts Biggest Drop (Update1) By Yoolim Lee

Singapore, July 26 (Bloomberg) -- Singapore's industrial production posted its biggest drop in June as electronics factories cut back in response to flagging exports.

Industrial production, which accounts for a quarter of the economy, fell 16.1 percent from a year earlier after dropping a revised 10.6 percent in May, the Economic Development Board said. Economists polled by Bloomberg News had expected a 14.5 percent fall in June.

Producers are scaling back as exports of electronics and other goods decline, cutting economic growth. The economy shrank 10.1% in the second quarter, putting Singapore into recession, the government estimates.

``Demand for electronics will be soft for the whole year,'' said C.P. Goh, chief executive of Beyonics Technology Ltd., a maker of printed circuit assembly, plates embedded with chips and other electrical components.

Factories at chipmakers such as STMicroelectronics NV were shut in June, and several companies have announced layoffs or forced holidays. The government announced a S$2.2 billion ($1.2 billion) package yesterday to soften the blow.

As a result of weakness in factory production, manufacturing may dip 9.6 percent this year, reversing a 15.2 percent gain last year, according to Tan Khee Giap, an economist at Singapore's Nanyang Technology University.

Hitachi

Just today, Hitachi Ltd., the third-biggest maker of large liquid-crystal displays, said it will stop making cathode-ray tubes used in PC monitors by the end of the year, putting at risk 950 jobs in Singapore, 1,670 in Malaysia and 770 in Japan.

``These are trying times for the Singapore economy,'' the Singapore Confederation of Industries, which groups 1,200 manufacturers, said in a statement. ``We urge the government to institute more measures to effect a quick and sustainable recovery.''

In June, production in the electronics industry, which makes up half the island's manufacturing, plunged 26 percent from a year earlier, a sharper drop than May's 19.6 percent slump and April's 8 percent decline.

``Sluggish demand from the U.S. pressed down the output of hard disk drives,'' the EDB said in a statement. ``The waning demand for mobile phones caused the telecommunications equipment industry to decrease its output further.''

Chemicals, which account for 11 percent of the total, dropped 7.4 percent from a year earlier, compared with a 1.2 percent decline in May and a 0.8 percent gain in April.

Production of machinery and other related goods, which accounts for one-fifth of total production, contracted 10.2 percent. In May, such production shrank 3.1 percent after falling 2.2 percent in April.

Pharmaceuticals and medical devices, which account for 13 percent of overall production, dipped 1 percent, compared with a 5.1 percent drop in the previous month.

-- Guy Daley (guydaley1@netzero.net), July 26, 2001

Answers

I am simply astonished that this catastrophe is descending on Singapore, of all places. Singapore is one of the most modern, fully developed, industialized counties on earth. It looks like all major focus is on Argentina these days, but I think more financial people around the world should be paying more attention to what is going on in Singapore.

-- Big Cheese (bigcheeese@multimax.net), July 26, 2001.