Singapore’s economy, already in recession, shrank 4.2 percent in the fourth quarter of last year from a year earlier, with overall annual growth coming in at 1.1 percent, the government said yesterday.
The Ministry of Trade and Industry maintained its forecast for this year of a GDP shrinkage of 2 percent to 5 percent amid fears the contraction may worsen if the global situation deteriorates further.
“Singapore’s GDP growth prospects appear weak in 2009 on account of the pessimistic global economic outlook ... the Singapore economy will experience continued deterioration in the near term,” the ministry said.
The 1.1 percent figure for overall annual growth last year is lower than the government’s estimate of 1.2 percent and sharply contrasts with the revised 7.8 percent growth figure for 2007.
Last quarter’s economic contraction of 4.2 percent was worse than the preliminary estimate of a 3.7 percent decline released last month.
On a seasonally adjusted annualized quarter-on-quarter basis, GDP declined 16.4 percent in the fourth quarter, slightly better than the previous estimate of a fall of 16.9 percent, the ministry said in its economic survey.
“The economy is likely to continue to perform weakly in the first half of 2009,” the ministry said. “The spillover effects of the global crisis will have an impact on many sectors.”
During the fourth quarter of last year, the city-state’s key manufacturing sector declined 10.7 percent annually and 21.3 percent on a seasonally adjusted annualized quarterly basis. For all of last year, the manufacturing sector fell 4.1 percent compared with a 5.9 percent expansion in the previous year.
The sector is being hit especially hard by the steep drop in export demand from Singapore’s main markets including the US.
In particular, Singapore’s electronics industry has seen orders evaporate rapidly as consumers in the US and other major economies hold back on spending.
Pharmaceutical output has also fallen in Singapore, which in October became the first Asian economy to sink into a recession after two straight quarters of contraction.
“The manufacturing sector will likely be weighed down by declines in global demand for electronics products, pharmaceuticals and chemicals,” the ministry said.
Economists are anticipating a sharp slowdown in the first quarter.
DBS Bank said in a note after yesterday’s announcement that the outlook for the economy was “looking gloomier than ever, especially for the export-dependent manufacturing sector.”
Oversea-Chinese Banking Corp economists have cut Singapore’s outlook for this year to a contraction of 4.8 percent and are tipping an annual drop of 6.1 percent for the first quarter.
Singaporean Prime Minister Lee Hsien Loong (李顯龍) said earlier this week the economy could shrink by more than 5 percent this year if the global downturn worsened.