Singapore said its economy could experience a technical recession in the second half of 2010 even as the island remains “on track” for an expansion of 13% to 15%t for the full year.

Singapore’s economy will moderate in the second half of 2010 and next year, S. Iswaran, senior minister of state for trade and industry, said in parliament today. A technical recession is two consecutive quarters of economic contraction.

 

“The pace of recovery in the global economy is expected to remain subdued for the rest of the year,” Iswaran said. “This will affect the performance of our manufacturing and trade- dependent services sector. The biomedical manufacturing cluster could also continue to be affected by some scheduled plant maintenance shutdowns.”

 

Singapore has remained vulnerable to fluctuations in overseas demand for manufactured goods even after the government boosted financial services and tourism. A 19.8% annual rate of decline in the island’s gross domestic product in the third quarter halted a record pace of expansion in the first half, a trade ministry report showed last week.

 

“A technical recession could happen in the second half of the year,” Iswaran said. “If this happened, it would largely be a reflection of the sharp swings in the biomedical manufacturing cluster.”

 

The performance of Singapore’s pharmaceutical industry is volatile as production swings by companies such as Sanofi- Aventis SA can cause industrial output to fluctuate from month to month. Drug companies sometimes shut plants for cleaning before making different products.

 

Singapore’s export growth slowed in September as shipments of electronics and pharmaceuticals eased, the trade promotion agency said in a statement today. The island’s dependence on overseas trade, with non-oil exports equivalent to more than half of GDP, makes it vulnerable to swings in global growth.

 

Still, continued global demand for electronics goods will “lend some support” to the electronics and precision engineering industries, Iswaran said today.

 

Singapore is also benefitting from rising visitor arrivals as new attractions such as the island’s integrated resorts lure tourists, he said. The resorts run by Genting Singapore Plc and Las Vegas Sands Corp. incorporate casinos, restaurants, malls and a Universal Studios Inc. theme park.

 

Singapore in August announced measures to cool the property market, including increasing down payments for second mortgages and imposing a stamp duty on property held for less than three years, to curb speculation.

 

It’s too early to assess the success of the government’s property-market measures, Mah Bow Tan, the island’s national development minister, said in parliament today. The government will “reserve the right” to take more steps if needed, he said.