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Singapore's GDP shrinks 20% in Q1

SINGAPORE'S economy plummeted nearly 20 percent in the first quarter, its biggest contraction ever, flagging a miserable start to the year for the Southeast Asian city-state, which is grappling with the worst global slump in decades.

Gross domestic product in Singapore plunged an annualized, seasonally adjusted 19.7 percent in the first quarter from the previous quarter and fell 11.5 percent from a year earlier, both record drops, the Ministry of Trade and Industry said yesterday.

The government now expects the economy to shrink between 6 percent and 9 percent this year from a previous forecast of a drop between 2 percent and 5 percent, the ministry said in a statement.

The 2009 growth forecast has now been cut three times.

Singapore announced in January a US$14-billion stimulus package, and the government may boost spending again in June to help bolster the economy, said Tai Hui, head of Southeast Asia research for Standard Chartered in Singapore.

"We believe we're facing a Great Recession, but we're not going into a Great Depression," Hui said. "We still expect to see some signs of stabilization at the end of 2009, although admittedly mild."

The island's economy has already contracted quarter-on-quarter over four consecutive quarters.

Singapore was the first country in Asia to report GDP figures for the January-March period, and its dismal showing suggests that the region's most export-dependent economies may face deeper and longer recessions than previously estimated by economists.

The city-state's central bank, known as the Monetary Authority of Singapore, said it lowered the center of its currency trading band, which was effectively a small, one-time devaluation of the Singapore dollar.

But it said there was no reason for "any undue weakening" of the Singapore dollar.

The central bank's inflation forecast for prices to fall as much as 1 percent this year was unchanged.

Imports fell 28 percent last month from a year earlier, the ministry said.


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