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     FrontPage Edition: Thu 14 February 2008

Singapore economy expected to grow by 4.0-6.0 per cent in 2008


GDP Growth to Moderate to Medium Term Potential

The Ministry of Trade and Industry (MTI) announced today that the Singapore economy is expected to grow by 4.0-6.0 per cent in 2008.
GDP Performance for 2007: Moderating but Above-Trend Growth
Economic growth moderated in the fourth quarter of 2007. GDP grew by 5.4 per cent year-on-year, down from the 9.5 per cent increase in the previous quarter.
Growth on an annualised quarter-on-quarter basis declined to -4.8 per cent, down from 5.1 per cent in the third quarter. The slowdown reflected largely a sharp decline in biomedical manufacturing rather than the impact of the slowing US economy. The fastest growing sectors were construction and financial services.
For 2007 as a whole, growth was still an above-trend 7.7 per cent, following 8.2 per cent in 2006.
GDP Outlook for 2008: Moderation to Potential
Since the last review in November 2007, external economic conditions have deteriorated and downside risks have increased.
Compared to three months ago, there is broad consensus now that the US economy is entering a slowdown. The key uncertainty is over the length and severity of this slowdown, which will in turn influence how the rest of the world and key industries are affected.
In view of the greater downside risks, MTI has revised the 2008 forecast for the Singapore economy to 4.0-6.0 per cent, from the previous 4.5-6.5 per cent.
Current conditions suggest that the US will likely enter a mild recession in the first half but its strong fundamentals, coupled with fiscal and monetary stimulus, will help to support recovery in the second half. Growth in the region will moderate but remain healthy. In this scenario, Singapore’s GDP growth is likely to be in the upper half of the forecast range.
However, if the US slips into a more severe recession, the region will be more significantly affected. The effects on Singapore will also be stronger, particularly in the sentiment-sensitive and external-oriented sectors like electronics, wholesale trade, and financial services. In this environment, the Singapore economy will grow at a slower pace, nearer the lower end of the forecast range.
In either scenario, slower GDP growth this year should be viewed in the context of above-trend growth in the last four years and represents a moderation to the economy’s underlying potential rate of growth of 4-6 per cent.
Ministry of Trade and Industry 14 February 2008

Source: Press Release 14 Feb 2008

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