Singapore’s manufacturing output grew at a sharply slower-than-expected pace in December as most segments logged tepid expansion and benefits of a lower base of comparison from last year started to wear off.

 

Analysts believe the slowdown points to a more sustainable rate of expansion this year.

 

“Singapore’s manufacturing output should remain on a growth trajectory in 2011, supported by the positive outlook for the global economy. Many factors that were supportive in 2010 remain in place, though the advantage of a lower base will cease to exist,” said David Cohen, director of Asian economic forecasting at Action Economics.

 

Manufacturing output grew 9% from a year earlier, according to data released by the Economic Development Board Wednesday. This is lower than the 19% median forecast of 12 analysts polled by Dow Jones Newswires and also below the most pessimistic forecast of 10.7% by Standard Chartered Bank.

 

In November, manufacturing output grew a revised 40.5%, faster than the preliminary estimate of 39.8% last month, the data showed. For the whole of 2010, manufacturing output expanded 29.7%.

 

Singapore’s economy recovered from a global slowdown in 2009 to log its fastest pace of expansion last year in its 45-year history. Analysts say the 2010 economic growth, estimated by the government at 14.7%, is unlikely to be repeated.

 

“Singapore’s growth is likely to return to trend in 2011 on a moderation in the manufacturing sector (especially in pharmaceuticals) and a high base effect,” Standard Chartered Bank economist Alvin Liew wrote in a note after the data were released. Liew expects GDP to expand 4.6% in 2011.

 

Analysts expect inflation to be the biggest worry for authorities of the island nation in 2011. The Monetary Authority of Singapore said it expects inflation to remain high in the first half of the year, though it didn’t give any indication of its policy response.

 

“As noted in MAS’ November 2010 Inflation Report, headline inflation is expected to be higher over the next few months, mainly due to the recent surge in (certificate of entitlement) premiums and global food prices,” the MAS said in a statement on Wednesday. “However, we expect it to moderate in the second half of 2011.”

 

Government data released Monday showed that the consumer price index, the main measure of inflation, gained 4.6% in December, the fastest pace in two years, prompting some analysts to flag further monetary tightening in April.