S'pore Economy To Contract 4.9% In 2009: MAS Survey

Source : The Business Times, March 16, 2009

Singapore's economy could shrink by 8.5 per cent in the first three months of 2009, hit by a downturn in trade, and its currency could lose about 8 per cent against the US dollar this year, a Monetary Authority of Singapore survey showed.

Annual inflation for 2009 is seen at a median 0.2 per cent from an actual rise of 6.5 per cent in 2008

The Singapore dollar is expected to slip to 1.56 to a US dollar from 1.44 to a US dollar at the end of 2008, the survey of 20 private economists showed.

Growth would pick up later in the year and narrow the contraction to 4.9 per cent for the whole of 2009, the survey showed. Gross domestic product contracted 4.2 per cent in the fourth quarter of 2008.

Standard Chartered economist Alvin Liew said the 8.5 per cent projected contraction in the first quarter would be a record fall since the quarterly GDP data was made available in 1976. The Monetary Authority of Singapore was not immediately available to confirm that.

The economy grew 1.1 per cent in 2008 from a year earlier.

Despite a gloomy outlook for most industries, construction was expected to continue to grow 8.2 per cent compared with 7.5 per cent in a survey in December.

'As reflected by the mean probability distribution, the most likely outcome is for the Singapore economy to contract by 5.0 per cent to 5.9 per cent this year,' the survey said.

Singapore's Minister Mentor Lee Kuan Yew told a Reuters forum this month that the economy could contract 10 per cent this year if exports continue to weaken sharply. Mr Lee's growth forecast is twice as bad as the government's official view.

Non-oil domestic exports are expected to fall 17.5 per cent in 2009, compared to an actual contraction of 7.9 per cent in 2008, the survey said.

Manufacturing is also expected to decline 10.3 per cent in 2009, down from -4.5 per cent in the December survey while unemployment is expected to rise to 4.4 per cent from 3.4 per cent in the same period.

Singapore's DBS Bank said in a recent research report, the Republic could lose 99,000 jobs by mid 2010. A total of 16,880 workers lost their jobs in 2008, according to the Ministry of Manpower, but the unemployment rate was still at a low of 2.5 per cent on a seasonally-adjusted basis at the end of December.


Annual inflation for 2009 is seen at a median 0.2 per cent from an actual rise of 6.5 per cent in 2008, said the survey, which does not represent the bank's own views or forecasts. -- REUTERS