The Ministry of Trade & Industry (MTI) has yet again revised downward the Gross Domestic Products (GDP) forecast for this year to contract between 6.0 to 9.0 per cent. This revision dated 14 April came after their earlier forecast made on 21 January of contraction of between 2.0 to 5.0 per cent. The new forecast is more severe than we have hoped for at the beginning of the year.
Based on the advance estimates, the first quarter 2009 real GDP for Singapore contracted by 11.5 per cent when compared to the same period last year on a year-on-year basis. This is worse than the 4.2 per cent contraction recorded in the fourth quarter of 2008. The deteriorating first quarter of 2009 continued unabated from a poor showing in the final quarter of 2008.
The sector that contributed to the significant drop in GDP was manufacturing. The manufacturing sector is estimated to slump by 29.0 per cent in the first quarter, compared to the 10.7 per cent contraction in the last quarter of 2008. The reduction in volume of external trade for past months is indicative of how bad the first quarter was for the manufacturing sector. We are not going to see an improvement in our exports when the world is still facing recessionary problems.
The services producing industries contracted by 5.9 per cent in the first quarter, compared to the1.3 per cent contraction in the last quarter of 2008. This is mainly due to the severe slowdown in trade and commerce. Financial services, hotels and restaurants too continued to contract under this recessionary period.
The construction sector is the only sector that saw robust growth because of continuing housing and infrastructure projects. It is estimated to grow at 25.6 per cent for the first quarter.
There is no end in sight yet for the global economies to recover from this deep recession since World War II. How US, Europe, Japan and China perform in the next few quarters will be key to how fast we can see Singapore recovering. As the Singapore government has spoken, it will be negative growth for the whole of 2009 for sure.
(Source: MTI Press Statement 14 April 2009)
Written on 4/21/2009 4:58 PM
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