Singapore's worst economy -11.5%

April 15, 2009

Singapore economy

Not as bad as it looks

Downward revision by Govt comes on the heels of a poor first quarter

By Alvin Foo
		Singapore also revised downward its outlook for 2009 and now expects GDP to contract by 6 to 9 per cent compared with the previous forecast for the economy to shrink by 2 - 5 per cent. -- ST PHOTO: CAROLINE CHIA

SINGAPORE on Tuesday released the worst set of economic data in the nation's history and slashed its growth projection for the year, after exports collapsed in the first quarter by more than expected.

But economists say these grim figures largely reflect past trauma and do not necessarily mean the current economic situation is worsening significantly.

Economy may shrink 6-9% SINGAPORE'S full-year economic growth forecast was revised dramatically downwards by the Government on Tuesday - the third such change in less than four months. The Government now expects Singapore's gross domestic product (GDP) to shrink between 6 and 9 per cent this year, instead of the 2 to 5 per cent contraction thought previously. ... more RELATED LINKS MTI REVISES FORECASTS

The Ministry of Trade and Industry (MTI) yesterday said the economy shrank in the first quarter by a drastic 11.5 per cent over the previous year and 20 per cent over the previous quarter - both record declines.

On the back of these numbers, the Government also downgraded its growth forecasts as well as its trade projections for the full year.

However, the dismal first-quarter figures are advance estimates that were heavily weighted on numbers from January and February, which bore the brunt of the downturn, said economists.

They added that more recent data, including last month's export figures that were also released yesterday, actually show an encouraging trend of economic improvement.

Exports in March rose a better-than-expected 11 per cent over February, on top of a 1.6 per cent rise in February over January, according to International Enterprise (IE) Singapore.

Although exports last month were still some 17 per cent lower than a year ago, the month-on-month increase was 'staggeringly strong', said HSBC economist Robert Prior-Wandesforde.

'It is the first back-to-back monthly rise we've seen in exports since July-August 2007, and it's also the biggest two-month rise since December 2005.'

The rise in exports stemmed mainly from an increase in shipments to mainland China and Hong Kong, underpinning the 'nascent rebound' in the Chinese economy following Beijing's multibillion-dollar stimulus package, noted OCBC economist Selena Ling.

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