Singapore forecasts minus 5% GDP loss

By Neil Chatterjee | January 22, 2009, Thursday |

Print Edition

SINGAPORE'S economy shrank the most on record in the last quarter of 2008 and the government forecast a 5-percent contraction this year and a possible fall in consumer prices, which may prompt a one-off currency devaluation.

A government declaration that the economy was suffering its worst ever recession and official forecasts of a continued slump suggested to analysts that the central bank could push down the center of the trading band for the Singapore dollar, effectively devaluing it to help the key export sector.

The grim figures, largely a reflection of Singapore's exposure to the slump in global trade, also pave the way for an expansionary budget today as the government scrambles to shelter the economy from the worst global financial crisis in decades.

"The Singapore economy is going through its sharpest, deepest and most protracted recession," the Trade Ministry's Second Permanent Secretary Ravi Menon told journalists.

Government data showed that gross domestic product shrank in the fourth quarter at a deeper-than-expected and seasonally adjusted rate of 16.9 percent, the biggest fall on record and the third consecutive quarterly contraction. Provisional figures had reported a 12.5-percent slump.

From a year earlier, GDP fell 3.7 percent.

Economy

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Singapore forecasts minus 5% GDP loss

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