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Singapore revises upward economy forecast

SINGAPORE'S Ministry of Trade and Industry (MTI) announced today that it expects the country's economy to contract by 4.0 to 6.0 percent in 2009.

The new forecast is an upward revision from the contraction of 6.0 to 9.0 percent that it had forecast on April 14 this year.

The MTI said in a statement that the revised forecast reflects "upward revision in first quarter performance, spike in biomedical manufacturing output leading to improved second quarter performance, and subdued outlook for the rest of the year."

The MTI also said that the country's real GDP rose by 20.4 percent in the second quarter compared to the first quarter on a seasonally-adjusted annualized basis, a sharp improvement from the12.7 percent contraction experienced in the previous quarter.

Compared to the same period last year, real GDP is expected to contract by 3.7 percent in the second quarter, smaller than the 9.6 percent contraction registered in the first quarter of 2009.

In the second quarter, manufacturing is estimated to have contracted by 1.5 percent, compared to a 24.3 percent contraction in the first quarter. This reflects chiefly a spike in output registered by the volatile biomedical manufacturing cluster, and an improvement in the electronics cluster due to inventory restocking, both of which may not be sustained.

Overall, the services producing industries remained weak, contracting by 5.1 percent in the second quarter, similar to the first quarter. The majority of the services producing industries continued to see declines in year-on-year terms.

The wholesale and retail trade sector continued to contract, albeit at a slower pace with smaller declines in non-oil domestic exports and non-oil re-exports. Financial services also saw a less severe contraction as general market sentiments improved. On the other hand, the hotels and restaurants sector was weighed down by the slump in tourist arrivals.

"The revised 2009 forecast of minus 6.0 to minus 4.0 percent reflects the less severe contraction in the first half of the year, while the underlying economic conditions remain weak," the MTI said.


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