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Singapore’s economy shrank the most in at least 33 years last quarter as plunging exports push Asian nations deeper into an economic slump and add pressure for the nation to weaken its currency.
Gross domestic product declined an annualized 16.4 percent last quarter from the previous three months, after shrinking a revised 2.1 percent between July and September, the trade ministry said in a report today. The contraction was less than a Jan. 21 estimate of 16.9 percent.
Singapore’s dollar fell as the trade ministry said the growth prospect is “weak” this year and that any recovery would likely be gradual. The economy has contracted for three straight quarters, sliding into recession along with Japan, Hong Kong and New Zealand, and manufacturers such as Creative Technology Ltd. are cutting jobs.
“With the collapse in exports and industrial production, the weight will fall on the Singapore dollar to take the adjustment,” said Thio Chin Loo, a senior currency strategist at BNP Paribas SA in Singapore. “We can expect the Singapore dollar to weaken.”
The Monetary Authority of Singapore, which uses the currency to manage inflation, stopped favoring gains in the local dollar in October. Thio says the central bank may allow the exchange rate to weaken further in the next review in April by re-centering the policy band that the Singapore dollar is allowed to trade in.
The Singapore dollar fell 0.3 percent to 1.5322 against the U.S. currency as at 9:47 a.m. local time today. The currency may weaken to S$1.60 per U.S. dollar by the end of June, Thio said.
Weak first half
“The economy is likely to continue to perform weakly in the first half of 2009,” the ministry said. Economic growth may “bottom out in the latter part of 2009.”
Singapore’s government is already accelerating public projects and encouraging companies to retain workers by handing out cash as demand for goods and services declines. Hong Kong’s government said yesterday it will refund taxes, suspend property rates and boost spending on infrastructure as the economy heads for its first full-year contraction since 1998.
“Singapore’s GDP growth prospects appear weak in 2009 on account of the pessimistic global economic outlook,” the ministry said. “While there is a possibility that a strong and sharp recovery might take place, a more gradual recovery trajectory is expected due to the extensive nature of the current downturn.”
Singapore’s $161 billion economy declined a revised 4.2 percent last quarter from a year earlier, compared with zero growth between July and September.
This is the second revision Singapore has made to its fourth-quarter GDP figures. Its revision on Jan. 21 was released earlier than usual to coincide with the government’s budget announcement the next day, which was also moved forward to hasten aid to companies.
“The growth numbers will continue to be dismal as most industries are seeing subdued activity,” said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore. “There are significant downside risks to the economic outlook.”
The government expects GDP to shrink 2 percent to 5 percent this year, and Prime Minister Lee Hsien Loong has said the economy may remain in a recession all year. The economy grew a revised 1.1 percent in 2008, less than the 1.2 percent estimated last month.
Manufacturing, which accounts for a quarter of the economy, fell 10.7 percent in the three months ended December from a year earlier, the trade ministry said.
Services dropped a revised 1.3 percent in the fourth quarter from a year earlier, while construction gained a revised 18.5 percent.
“The manufacturing sector will likely be weighed down by declines in global demand for electronics products, pharmaceuticals and chemicals,” the ministry said. The financial services industry “is likely to continue to slow down in the midst of heightened uncertainty and risk aversion.”
Singapore economy shrinks 4.2 pct in 4th quarter
The Associated Press
Singapore said its economy shrank more than previously estimated in the fourth quarter, as a global collapse in trade hit the country’s exports.
Singapore’s gross domestic product shrank 4.2 percent in the October-December period from the same quarter a year earlier, more than the 3.7 percent contraction the government reported last month, the Trade and Industry Ministry said Thursday.
The economy shrank a seasonally adjusted, annualized 16.4 percent in the fourth quarter, the ministry said. GDP grew 1.1 percent last year and 7.8 percent in 2007, the ministry said.
The government expects the economy to contract as much as 5 percent this year as many of the country’s biggest industries — such as manufacturing, finance and tourism — all suffer in the face of a severe global slowdown.
Singapore’s City Developments FY net falls 20 pct
City Developments (CityDev), Singapore’s second largest property developer, on Thursday posted a 20 percent fall in full-year net profit due to a drop in home sales and lower earnings from its hotel operations.
CityDev said net profit for 2008 fell to S$581 million from S$725 million a year earlier. Its earnings were below the average forecast of S$651 million by 18 analysts polled by Thomson Reuters.
The firm added that it expects to “continue to perform profitably” this year.
CityDev’s fourth quarter net profit was S$100 million, based on the difference between the reported figure for the full year and the S$481 million reported for the first nine month