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SINGAPORE: Singapore’s Ministry of Trade and Industry (MTI) on Wednesday revised Singapore’s GDP growth forecast downwards to -5.0 to -2.0 per cent, lower than previous estimates of -2.0 to +1.0 per cent.
The ministry also revised down its forecast for the Consumer Price Index (CPI) in 2009, estimating inflation to remain unchanged or to decline at 1.0 per cent.
MTI said the weaker economic outlook was due to faster and steeper decline in the global economic activity, as well as spill over effects on key sectors of the economy from the last quarter of 2008.
Preliminary estimates for Singapore’s fourth quarter GDP showed that real gross domestic product (GDP) contracted by 3.7 per cent.
This resulted in a contraction in the city-state’s economy by 16.9 per cent on a seasonally adjusted annualised quarter-on-quarter basis, led mainly by a slowdown in the manufacturing and electronics sector compared to the third quarter of 2008 which saw a decline of 5.1 per cent.
For 2008 as a whole, the economy is estimated to have grown by 1.2 per cent, compared with 7.7 per cent in 2007.
The manufacturing sector is estimated to have contracted by 4.1 per cent, with clusters such as electronics, precision engineering, and chemicals hit by the rapid decline in demand in Singapore’s key export markets, especially in the last quarter of 2008.
In contrast, the construction sector grew by 17.9 per cent in 2008, compared to 20.3 per cent in 2007 due to a healthy level of construction output in the residential, industrial and civil engineering building segments.
Growth in the services producing industries were moderate with the financial services sector seeing a significant decline in fund management and stock broking activities in the second half of 2008, while trading in the foreign exchange market fell sharply.
MTI expects the economic downturn to continue in 2009.
It said the chemicals cluster is expected to weaken with lower oil prices and lower global demand for other manufactured goods, while global trade is expected to contract in 2009, affecting trade-related sectors such as wholesale & retail trade and transport & storage.
As for inflation which is expected to ease, the trade ministry said this is largely in expectation of a continued downward correction of commodity prices from the peaks in 2008, in line with the weakening global economy.
It added that the decline in the 2009 CPI reflects an adjustment from the high base recorded in 2008, when food, electricity tariffs, transport and accommodation costs rose significantly.
-CNA/yb/sf
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