Singapore could see a technical recession in the second half of 2010 as the global economic recovery remains subdued and planned drug plant shutdowns could hurt the manufacturing sector, the government said on Monday.

The government also said it was closely monitoring local property prices to ensure no bubble was formed.

 

The economy remains on track to achieve the growth forecast of 13-15% for the full 2010 year, Senior Minister of State for Trade and Industry S Iswaran said in parliament.

 

“A ’technical recession’ — which analysts define as two consecutive periods of negative quarter-on-quarter growth — could happen in the second half of the year,” he said.

 

“If this happened, it would largely be a reflection of the sharp swings in the biomedical manufacturing cluster.”

 

In the July-September period, the economy fell 19.8% from the previous quarter on a seasonally adjusted annualised rate, the largest contraction since the data was first collated in 1975.

 

However, continued growth in global demand for electronic products will lend support to the electronics and precision engineering clusters and a surge of visitor arrivals to Singapore will continue to bolster tourism-related sectors, Iswaran said.

 

Minister for National Development Mah Bow Tan told parliament the government was monitoring the property market closely and would “act fast to pre-empt problems”.

 

In August, Singapore announced restrictions on people buying second homes as part of new measures to cool its red-hot residential market, joining Hong Kong and China in taking steps to keep a lid on housing prices. 

 

Mah said the measures had dented resale transactions in September from August , but he could not say whether the government would need to introduce more measures in the future.