Singapore GDP May Shrink by a Tenth in 2009, CLSA Says

Bloomberg – 05 February 2009

Singapore and Taiwan may see their economies shrink by a tenth this year as Asia’s export-dependent nations trade less with each other, according to CLSA Asia- Pacific Markets.

Singapore’s economy will contract 10 percent and Taiwan’s gross domestic product will probably decline 11 percent, according to a CLSA report published today. South Korea’s GDP will drop about 7 percent, the report said.

“In a number of countries, the wheels have fallen off the primary driver of Asian growth: exports,” the CLSA report said. “Intraregional trade has slowed more aggressively than has extra regional.”

Asia’s export-driven economies are slowing as demand for their products diminishes amid recessions in the U.S., Japan and Europe. Exports account for about 32 percent of Asia’s GDP, according to the World Bank.

The International Monetary Fund yesterday slashed its 2009 growth forecast for Asia to 2.7 percent from 4.9 percent, and Managing Director Dominique Strauss-Kahn said a “worse outcome cannot be ruled out.”

 

Developing Asia, which excludes Japan, Australia and New Zealand, will probably expand 5.5 percent this year, the slowest pace since 1998, the IMF said in an update of its World Economic Outlook report last week.

China will expand 5.5 percent this year, while India’s economy will grow 5 percent, CLSA said.

Hong Kong, Malaysia and Thailand will see GDP contractions of 5 percent this year, while the Philippines and Indonesia will expand less than 1 percent in the same period, the report said.

“The exceptional weakness of indicators at the end of last year and the evidence so far that any rebound will be muted makes for extremely weak Asian growth forecasts,” CLSA said.