Singapore GDP May Shrink 5% in 2009, Biggest Decline on Record
Singapore's economy may suffer its worst annual contraction on record this year amid a slump in exports, increasing pressure on the government to take steps to help businesses and consumers.
Gross domestic product may shrink as much as 5 percent this year, the trade ministry said today, cutting its forecast for the second time in less than three weeks. It predicted a contraction of as much as 2 percent on Jan. 2. The economy grew
1.2 percent last year, less than earlier estimated.
Singapore will unveil this year's budget plan tomorrow, as it attempts to speed up aid to companies hurt by the global recession and minimize job cuts. More than 10,000 people were retrenched last year and a worsening economy may result in job losses tripling in 2009, reaching numbers not seen since the Asian financial crisis a decade ago, the government said.
"All the government can do is to ensure that citizens and businesses cope with the recession because it's not possible to counteract the drop in external demand," said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. "The situation may start to improve only in the fourth quarter" of 2009.
The Southeast Asian economy has contracted for three straight quarters, sliding into recession along with Japan, Hong Kong and New Zealand.
Gross domestic product declined an annualized 16.9 percent last quarter from the previous three months, after shrinking a revised 5.1 percent between July and September, the trade ministry said. The contraction in the fourth quarter was worse than a Jan. 2 estimate of 12.5 percent.
Singapore is facing unprecedented conditions in this recession and little can be done to mitigate the slowdown, Trade Minister Lim Hng Kiang said this week.
"The economic downturn has spread to all the key sectors of the economy," Lim said Jan. 19. "Our manufacturing sector is likely to continue facing a slowdown this year."