Singapore Revises Q4 GDP, Economy to Shrink by 16.4%

Singapore issued revised 2008 GDP estimates on Thursday showing the export-reliant economy contracted by 16.4 percent in the fourth quarter, and reiterated its forecast that it will shrink by 2-5 percent this year.

CNBC.com

"The economy is likely to continue to perform weakly in the first half of 2009," the Ministry of Trade and Industry said in a 130-page detailed survey of the Singapore economy in 2008.

The manufacturing sector will be weighed down by declines in global demand for electronic products, pharmaceuticals and chemicals, the ministry said, while financial services are likely to slow as volatile markets keep many investors on the sidelines.

Singapore's economy shrank 16.4 percent on an annualized, seasonally adjusted quarter-on-quarter basis but grew 1.1 percent for the whole of 2008, the ministry said in a statement.

The manufacturing sector declined by 10.7 per cent in the fourth quarter from a year ago, while services contracted 1.3 percent. Singapore's gross domestic product declined by 4.2 percent in October-December on a year-on-year basis.

The government's latest figures were little changed from estimates released on Jan 21, which showed the economy shrank an annualized 16.9 percent in the fourth quarter and grew 1.2 percent for the whole year.

The financial sector suffered a sharp contraction in the fourth quarter, declining 8.1 percent from a year ago.

"As the current downturn takes its toll, the near-term outlook for trade and investment appears bleak, not only for Singapore but also for most countries across the world," the ministry said.

"A larger concern is that this crisis may impact trade and investment flows well into the medium term as governments may face pressures to pursue protectionistic policies."

Singapore's economy could contract by more than 5 percent this year if the global economy worsens, local media quoted Prime Minister Lee Hsien Loong as saying this week.

Following the latest estimate, Oversea-Chinese Banking Corp lowered its 2009 Singapore GDP forecast to -4.8 percent from -2.8 percent, citing the rapid deterioration in the services sector and an expected rise in unemployment.

"Given that the balance of risks for growth is still tilted to the downside, the market speculation and pressure for a monetary policy easing at the April policy review cannot be discounted, with a re-centering of the Singapore dollar band lower still very much on the cards," head of treasury research Selena Ling said.

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The trade ministry also said the public sector will provide a boost to construction demand this year by awarding a record S$17 billion ($11.12 billion) to S$19 billion worth of projects.

Singapore issued three sets of GDP estimates this year as it wanted to provide a set of numbers before the Jan. 22 announcement of its 2009/2010 budget, which had been brought forward by one month because the city-state had fallen into a  recession.

The government typically issues two sets of GDP estimates -- an advance estimate about one week after the quarter, and more detailed data around five weeks after the advance estimate.

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