Singapore’s Economy May Contract 3.6% in 2009, MAS Survey Shows Print E-mail
Bloomberg –  2 September 2009

Singapore’s economy this year will probably contract less than economists predicted earlier as manufacturing improves, a central bank survey showed.

Gross domestic product may decline 3.6 pct in 2009, according to the median forecast in a quarterly survey of economists by the Monetary Authority of Singapore released today. That compares with a June forecast for a 6.5 pct contraction and the government’s estimate that the economy may shrink 4 pct to 6 pct.

Singapore expanded more than initially estimated in the second quarter as manufacturing and global demand improved, helping the nation emerge from its worst recession since independence 44 years ago. Asian countries from China to the Philippines are reporting better economic numbers as more than $2 trillion in stimulus by governments worldwide take effect.

The survey shows the “most likely outcome” is for Singapore’s economy to contract by 4 pct to 4.9 pct this year, the central bank said. The $182 billion economy may grow 4.5 pct next year, faster than the 4.2 pct forecast in June, the survey showed.

Singapore’s economy will probably shrink 3 pct this quarter from a year earlier, the survey of 21 economists showed. GDP shrank 3.5 pct in the three months ended June 30.

Manufacturing will probably plunge 7.1 pct this year, less than the June median estimate of a 14 pct drop, the survey showed.

The government has said the recent improvement in drugs and electronics output, which underpinned last quarter’s expansion, may falter and delay the Southeast Asian economy’s recovery.

Exports Fall

Non-oil domestic exports are expected to fall less than expected, sliding 11.5 pct in 2009, from an earlier forecast for a 14.1 pct decline, the survey showed. The government last month raised its 2009 forecast for exports, predicting overseas shipments may drop between 10 pct and 12 pct, from a previous estimate of as much as 13 pct.

Construction will advance 17.3 pct in 2009, the economists estimated. Financial services may contract 3 pct, according to the median estimate.

Consumer prices may be unchanged in 2009 after gaining 6.5 pct last year, the survey showed. The central bank expects consumer prices to fall 0.5 pct or climb 0.5 pct. Inflation may average 1.5 pct next year, the survey showed.

The Singapore dollar will probably end this year at S$1.44 versus the U.S. currency, compared with a June prediction of S$1.466, the survey showed.

Singapore should return to a policy of allowing the currency to strengthen once the economy recovers from its recession, the International Monetary Fund said Aug. 31.

Singapore’s unemployment rate may reach 3.8 pct at the end of 2009, compared with a June estimate of 4.2 pct, the survey showed. The jobless rate was 3.3 pct in the past two quarters.
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