Singapore is poised to be emerging Asia's worst-performing economy next
year, when it is likely to remain entrenched in recession as the global downturn
erodes demand for its exports, a Reuters poll shows.
The poll predicts the island state's gross domestic product (GDP) will
contract 1.1 percent in 2009. That marks a rapid deterioration in the economic
environment from two months ago as the global financial crisis has deepened - a
similar poll in late September forecast 4.6 percent GDP growth in
"Singapore is particularly open to external trade - its export-to-GDP ratio
is more than 180 percent, compared with an Asia average of 60-70 percent," said
Eric Tsang, an analyst at Calyon in Hong Kong.
"So as U.S., European and Japanese consumers spend less that will hurt
Singapore's exports and have a knock-on effect on the rest of the
Economists see some rebound in 2010, forecasting 4.2 percent growth, but
that would be well below average annual growth of 6.8 percent between 2003 and
Singapore slipped into recession - defined as two quarters of negative
quarterly growth - in the third quarter.
Philip McNicholas, an economist at Ideal Global in Singapore, said the
first quarter of next year would be especially tough - he forecasts GDP will
drop at an annualised rate of 15 percent, seasonally adjusted, as exports
"That will be mainly due to a collapse in U.S. sentiment," McNicholas said.
"The U.S. plans a fiscal stimulus package early next year, but it's got to get
that through Congress and to the people, so that may not be until the end of Q1
or the start of Q2."
The government pledged $1.5 billion last month to help firms secure credit
and said it was prepared to run a bigger budget deficit to boost the
Manufacturing accounts for about a quarter of the economy and factory
output fell 12.7 percent in October from September, seasonally adjusted, and
12.6 percent from a year earlier, led by sliding electronics and drugs
Manufacturing is expected to be harder hit next year as the downturn in
advanced economies accelerates and job losses in the sector will rise as a
result, analysts say.
Rising unemployment will dent consumer spending, which
is not being helped by a decline in tourism since August.
As the weak economy will encourage the authorities to keep monetary policy
loose, the Singapore dollar is likely to remain sluggish, the poll