The Singapore economy is expected to grow by 1 to 3 percent next year on weak external demand and sluggish global economy, the Ministry of Trade and Industry said on Monday.
"Global economic conditions are expected to remain subdued in 2012, with the outlook clouded by increased uncertainty and financial volatility," it said in a report on the performance of the economy.
The forecast for the year 2011 remained unchanged at 5 percent.
The ministry revised its reading of third-quarter economic growth to an annualized 1.9 percent on quarter-on-quarter basis, up from the initial estimate of 1.3 percent. The year-on-year growth for the quarter was 6.1 percent, up from 1 percent in the second quarter.
The manufacturing sector expanded by 14.2 percent year on year and the construction sector grew by 0.3 percent. The wholesale and retail trade fell by 0.2 percent, mainly due to weak exports. The financial sector grew by 10.5 percent.
The ministry said it expected the growth in the fourth quarter to weaken alongside deteriorating external macroeconomic conditions, with the weak electronics cluster likely to record low output and have a knock-on effect on precision engineering and wholesale trade.
The biomedical manufacturing cluster is expected to see a pullback in growth following the strong surge in the third quarter. The financial services sector is also expected to moderate.
Separate statistics released by trade promotion agency International Enterprise Singapore showed that the country's non- oil domestic exports in the third quarter shrank by 1.1 percent, following a growth of 1.9 percent in the second quarter.
The non-oil domestic export growth for 2011 was downgraded to 2- 3 percent from 6-7 percent, while total trade was downgraded to 8- 9 percent from 9-10 percent.
The non-oil domestic export growth forecast for 2012 was expected to be between 3-5 percent, while total trade was expected to grow by 3-5 percent, too.
The impact of weak external demand is beginning to be seen recently, with the non-oil domestic exports falling by 16.2 percent in October, led by a plunge of 51 percent for exports to the United States and 31 percent in exports to the European Union.
The Monetary Authority of Singapore, the central bank, also said in a recent report that the global economy and financial system were at their most fragile state since the global financial crisis in 2008.