SINGAPORE : Private sector economists expect negative or flat growth for Singapore's economy next year, due to poor external conditions.

Many have been revising their forecasts in recent months, and they said risks remain on the downside.

Volatile stock markets, a business environment fraught with fear, and poor consumer demand across the world have contributed to poorer growth for Singapore.

With conditions unlikely to improve in the near term, most private sector economists are downgrading their growth forecasts for Singapore in the year ahead.

"The external environment is extremely challenging. What you've had in the past several weeks is a rapid shift in both market consensus as well as government expectations on where growth is going to be," said Tai Hui, regional economic research head (Southeast Asia) at Standard Chartered Bank.

The government is warning that Singapore could see negative growth in 2009 - a view echoed by some economists.

Citigroup was among the first, in mid-October, to forecast a 1.2 per cent contraction for Singapore next year. Morgan Stanley and UBS followed with an even more bearish outlook - a decline of at least 2 per cent.

Others like Standard Chartered and DBS prefer to remain positive, with a growth forecast of just above 1 per cent for 2009, but they warned that risks are on the downside.

DBS said there is a 40 to 50 per cent chance that it may downgrade its forecast in the next few months.

On the whole, most economists agree that Singapore's economy should hit bottom around mid-2009.

"Recessions don't go on forever and the normal recovery mechanism such as the easing in commodity prices, oil prices have come down from their highs a few months ago, that's already providing some relief to consumers and businesses," said David Cohen, director of Asian Economic Forecasting at Action Economics.

"What you need to see is a recovery of the US economy or stabilisation at the very least. The housing market is crucial because that's a significant part of US household wealth," said Tai.

According to some forecasts, a recovery could begin by 2010, which should see the Singapore economy growing by about 4 to 5 per cent for the year.

The Singapore government expects the country's economy to grow by about 3 per cent this year, down from 7.7 per cent a year ago. - CNA /ls