Singapore economy to remain weak in 2009: central bank

Singapore economy to remain weak in 2009: central bank
Oct 29, 2008
AFP

SINGAPORE - Singapore's economy, which is already in a technical recession, will remain weak in 2009 on projections the global economic outlook will deteriorate further, the central bank said Tuesday.

As a financial crisis evolves to impact economic activity worldwide, the city-state is likely to be hammered given its heavy exposure to external demand, the Monetary Authority (MAS) said in its Macro Economic Review.

"Looking ahead, the outlook for the global economy has deteriorated amidst heightened risk aversion and deleveraging in the financial sector," MAS said.

As a small and open trading economy, Singapore is vulnerable to any downturn in its major export markets such as the United States, Europe, China, India and Japan.

"The risks to external demand conditions continue to be on the downside, and a more severe global slowdown cannot be discounted," the MAS warned.

"Taking all these factors into account GDP growth is expected to be around 3.0 percent in 2008, and the economy will continue to grow below its potential rate into 2009," the MAS said.

Prospects for a recovery late next year hinge on the performance of key global economies, it said.

Singapore this month cut its economic growth forecast for 2008 to 3.0 percent from between 4.0 and 5.0 percent after the economy slipped into a technical recession, described as two consecutive quarters of negative growth.

Real gross domestic product (GDP) declined by 6.3 percent in the third quarter after contracting 5.7 percent in the previous quarter, according to preliminary government data.

The MAS said Singapore's financial sector will suffer from a direct impact, while weakening consumer sentiment will affect retail trade and the property market.

Other segments of the econonomy like manufacturing and tourism will suffer from falling external demand, it said.

***********************************************************************************

S'pore is 'most stable' in region
Oct 29, 2008
The Straits Times

SINGAPORE is well-positioned to weather the economic slowdown because of its political and social stability, said Hong Kong-based Political & Economic Risk Consultancy.

Its analysts ranked Singapore as having the least political and social risks next year among 16 territories in Asia-Pacific, according to a summary of its 87-page report released to the media yesterday.The unlikelihood of sudden political changes, stable labour relations and sound policies, including measures to help the poor, were among the factors in Singapore's favour, said Perc's managing director, Mr Robert Broadfoot.

He told The Straits Times: 'Singapore's fiscal situation is strong enough for the fiscal incentives that are going to help the country get over the crisis and spread the pain of recession.'