UPDATE 1-Singapore economy grew by 1.2 pct in 2012 - PM

(Adds details, economists' comment)

SINGAPORE, Dec 31 (Reuters) - Singapore's economy grew by

1.2 percent in 2012, Prime Minister Lee Hsien Loong said on

Monday, indicating the city-state slipped into a recession in

the last three months of the year.

Credit Suisse economist Michael Wan, in a note to clients,

estimated that 1.2 percent growth for the year implies the

economy "contracted sequentially by 2 percent quarter-on-quarter

annualised in the fourth quarter."

"Following the minus 5.9 percent quarter-on-quarter

seasonally adjusted and annualised rate in the previous quarter,

we think that the economy has likely entered a technical

recession," Wan added. His estimates assumed no revisions to

data for the first three quarters.

Singapore, whose trade is around three times GDP, has been

badly hit by the weakness in Western economies that has crimped

demand for many of its exports. The city-state's electronic

manufacturers have also failed to tap surging demand for smart

phones, unlike rivals in South Korea and Taiwan.

For the first 11 months of 2012, electronics production fell

11.1 percent compared with the same period last year,

underscoring the weakness in the export markets, according to

industrial production data released last week.

Lee, in his New Year message, said "Growth was slower this

year, at 1.2 percent. The weak U.S., European and Japanese

economies dampened our growth, but some industries have also had

difficulty hiring the workers they need to grow."

Looking ahead, the Singapore prime minister said the economy

will likely expand by 1-3 percent in 2013, reiterating an

earlier government forecast.

"In our new phase, we must expect slower growth than we have

become accustomed to," Lee added, referring to government

efforts to raise productivity rather than rely on low-cost

foreign workers to boost economic activity.

Singapore's economy grew by 4.9 percent in 2011 and the

government's latest forecast for 2012, just made in November,

had been for expansion of around 1.5 percent. The 1.2 percent

growth cited by Lee was, however, slightly higher than the 1.1

percent estimate of most economists in a Reuters poll.

Credit Suisse's Wan said the government measures to make it

harder for firms to hire cheap labour from abroad will crimp

Singapore's economic performance in the near term.

"We expect less productive companies to start to get weeded

out in 2013 as restructuring bites... Businesses that have not

made the necessary adjustments to survive in the island-state's

high-cost environment will choose to relocate, or throw in the

towel completely," he said.

The Straits Times newspaper reported earlier on Monday that

some retailers in the city-state have complained of poor

December sales, with revenue rising by just 5 percent despite

deep discounts and a boom in visitor arrivals.

Rising rents and the strong Singapore dollar have made the

city-state more expensive, and people are doing more of their

shopping when they are in other countries or buying off the

internet, the retailers said.

The government will release advance estimates for the fourth

quarter on Jan 2.

(Reporting by Kevin Lim; Editing by Richard Borsuk)

Source: http://news.yahoo.com/1-singapore-economy-grew-1-2-pct-2012-094224793--business.html

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