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The Ministry of Trade and Industry (MTI)
announced today (21 Nov 2008) that the Singapore economy is expected to grow by
around 2.5 per cent in 2008, and -1.0 to 2.0 per cent in 2009. |
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Performance in Third Quarter 2008 and
GDP Outlook for 2008 |
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Singapore’s GDP contracted by 0.6 per
cent in year-on-year terms in the third quarter of 2008. On an
annualised quarter-on-quarter basis, growth declined by 6.8 per
cent, compared to a fall of 5.3 per cent in the second quarter. |
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The largest contraction came from the
manufacturing sector, with the decline led by the electronics and
biomedical sciences (BMS) segments. Falling external demand and the
relocation of some electronics production to other countries
contributed to the poor performance of electronics, while the BMS
segment continues to be dampened by the production of pharmaceutical
ingredients with lower values compared to a year ago. |
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Growth in the services sector has
started to moderate. Services-producing industries grew by 5.3 per
cent in the third quarter, compared to 7.1 per cent in the previous
quarter. The plunge in stock markets worldwide since mid-September
and disruptions in the global credit markets have started to affect
many of the services and trade-related sectors, especially financial
services, wholesale trade, and transport and storage. |
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Economic growth in the developed
economies has slowed down, with several countries already in
recession. Consumer and business confidence indicators across the
major economies are weak. The contraction in global demand has hit
regional economies too. As a result, Singapore’s trade volumes and
other indicators of regional demand, including visitor arrivals,
have fallen. All these developments will further dampen Singapore’s
economic growth in the remaining months of 2008. |
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In view of the continued deterioration
in the outlook for external and regional demand, MTI has moderated
the GDP growth forecast for 2008 further downwards to around 2.5%. |
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GDP Outlook for 2009 |
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The economic downturn is expected to
last for several quarters, well into 2009. In its latest World
Economic Outlook, the International Monetary Fund (IMF) noted that
economic outlook is “exceptionally uncertain”. It also forecasted
that advanced economies as a whole would register negative growth in
2009. Regional economies are also expected to post weak growth. |
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Singapore’s economy is expected to face
a broad-based slowdown in 2009. The financial services sector is
expected to remain weak in 2009. Financial institutions are
operating in an environment of heightened risk aversion and weaker
demand. The slowdown in international and regional trade will
significantly impact our wholesale trade and the transport and
storage sectors. Electronics will continue to be affected by weak
global semiconductor demand, but the BMS and chemicals clusters will
be boosted by the addition of some new capacity and plants coming
on-stream in late 2008 and 2009. |
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Considerable uncertainty remains as to
how deep and long this downturn will last. Much will depend on the
restoration of confidence in the financial markets and the revival
of credit flows. At the same time, there are risks at play that
could prolong the slowdown in the developed economies, especially
the US. The efficacy of policy actions being taken by governments
around the world to restore stability, normalcy and consumer
confidence could turn out weaker or may take longer than expected. |
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In view of these increased uncertainties
in the external environment, MTI has forecasted the Singapore
economy to grow by -1.0 to 2.0% in 2009. |
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Inflation Outlook for 2009 |
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For 2009, the CPI inflation forecast has
been revised from 2.5-3.5% to 1-2%. The downward revision is mainly
attributable to the sharp fall in global commodity prices in the
past few weeks, and lower than expected annual values of HDB
properties which would remain unchanged from that of 2008[1]. |
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Ministry of Trade and Industry
21 November 2008 |
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1 Accordingly, the Monetary Authority of Singapore’s
underlying inflation forecast, which excludes the cost of
accommodation and private road transport, has been revised from
around 2% to 1-2%. |
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More..... |
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Source:
www.mti.gov.sg Press Release 21
Nov 2008 |
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FrontPage Edition: Sun 23 Nov 2008
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