The island-state’s economy expanded 10.2 percent in the third quarter to September from a year earlier, prompting the government to raise its full year growth forecast to nine percent from 7.5-8.5 percent.
The stronger-than-expected third quarter growth was driven by robust earnings in the key manufacturing sector, the Ministry of Trade and Industry said.
Singapore’s unemployment rate also fell to its lowest in two years and the government announced a hefty restoration of employers’ contribution to the state-managed employees’ pension fund which was slashed in half at the height of the Asian financial crisis in 1997.
But as the Singaporean economic dynamo hummed, neighboring Philippines, Indonesia and Thailand – key members of the Association of Southeast Asian Nations (ASEAN) – were mired in political turmoil.
High oil prices further nudged upwards by fears of an all-out war in the Middle East are expected to excacerbate woes, but Singapore is seen to be the least affected, analysts said.
"Rubbing salt into Asia’s wounds is the fact that due to rapid shrinking of stock market capitalization, fund managers have ignored ASEAN despite good macro performances," Singapore-based DBS Group Holdings Ltd. said, mentioning Indonesia, the Philippines and Thailand.
An ASEAN diplomat, who asked not to be named, said: "Singapore is the proverbial good boy living in a tough neighborhood."
ASEAN economic ministers who met recently in the northern Thai city of Chiang Mai voiced concerns that political troubles in some member countries were clouding efforts to promote the region as an investment area.
"Not all of Indonesia is in flames. There are just some pockets of trouble," ASEAN Secretary-General Rodolfo Severino said in response to investors’ concerns on Indonesia.
ASEAN also includes Brunei, Cambodia, Laos, Malaysia, Myanmar and Vietnam.
"Political risk has been the major curse for Asia in 2000," DBS Group Holdings, Southeast Asia’s largest bank in terms of assets, said in a report.
"In Indonesia, President Wahid is still struggling to put together an efficient, cohesive and credible government," it said.
Uncertainty looms in Thailand ahead of general elections later this year, it added.
The Philippines, which has withstood the Asian financial crisis better than many of its neighbors, looks set to reclaim its title as the region’s basketcase, thanks to a leadership crisis involving President Joseph Estrada.
Legislators have threatened to impeach the former movie star turned president after a jilted friend made serious allegations of his alleged involvement in a bribery scandal – accusations which he denied.
Vice President Gloria Arroyo’s withdrawal of support and a Roman Catholic church-initiated call for the president to step down have deepened the crisis.
The peso currency plunged to a historic low of 48.50 to the dollar despite intervention from the central bank.
Economic planners last week lowered economic growth targets for next year to between 4.2 and 4.7 percent instead of five and 5.5 percent. Gross domestic product expansion is seen at four percent this year.
DBS Bank however projects only a threes percent GDP growth for the Philippines this year and 3.7 percent next year.
Indonesia is to grow 3.5 percent this year and four percent in 2001 while Thailand is forecast to expand 4.5 and 4.3 percent over the same period, it said.
Malaysia is to grow 8.3 percent this year and 6.5 percent in 2001, while Singapore’s growth is expected at 9.3 percent this year and 6.7 percent next year.