Orders at Singaporean shipyards fell by more than half last year as the offshore industry was hammered by falling oil prices.
Companies in the sector have been forced to restructure debts and cut costs, including axing jobs. The downturn has also left the three largest banks, DBS, OCBC and UOB, with bad loans.
Orders for Singapore’s shipyards dropped nearly 58 per cent from S$19 billion (US13.7 billion) at the end of 2015 to about S$8 billion at the end of 2016, according to the Association of Singapore Marine Industries.
The yards secured S$820 million in new orders last year compared to S$4.9 billion in 2015, as the global oil and gas industry cut exploration and production budgets.
Total employment in Singapore’s offshore and marine industry shrank by 10 per cent year-on-year, falling to 85,600 in 2016.
Chua San Lye of Singapore rig builder Sembcorp Marine said while prospects for the industry had taken a positive turn after the Opec production cut in late 2016, a full recovery would take longer. Chua said: “There are pockets of opportunities with capex investments in Mexico, Iran and the Norwegian continental shelf, and offshore E&P activities remaining robust in the Middle East and India.”
The prospects for the overall Singaporean economy are less gloomy.
Singapore’s first-quarter GDP shrank at a lower rate than previously estimated compared to the final quarter of last year, the Ministry of Trade and Industry reported. It announced a quarter-on-quarter fall of 1.3 per cent against an earlier estimate of a 1.9-per-cent drop.
Median estimates by Bloomberg forecast a 0.9-per-cent fall. The manufacturing sector contracted by 1.5 per cent quarter-on-quarter, in contrast to the 39.8-per-cent growth seen in the previous quarter. However, the drop was smaller than the estimated 6.6-per-cent fall. The Lion City’s construction sector grew 4.3 per cent compared to the previous quarter while the wholesale and retail trade dropped 2.4 per cent.
In year-on-year terms, Singapore’s economy grew 2.7 per cent in the first quarter, down from 2.9 per cent on the last quarter of 2016. Manufacturing grew 8 per cent in year-on-year terms. The authorities said they had maintained their growth forecast for 2017 at 1 to 3 per cent.
Picture credit: Wikimedia