Thursday, Singapore's Ministry of Trade and Industry lowered GDP estimate for 2008 and maintained 2009 outlook. The economy may shrink up to 5% this year.
The MTI said economic growth for 2008 eased to 1.1% from 7.8% in 2007. The growth estimate for 2008 was lowered from 1.2%.
"Singapore's GDP growth prospects appear weak in 2009 on account of the pessimistic global economic outlook," the MTI stated. Economic growth may bottom out in the latter part of this year. The ministry maintained the view that the economy will contract by 2% to 5% in 2009.
Earlier this week, Singapore's Prime Minister, Lee Hsien Loong had reportedly said the economy might contract more than 5% this year. It could be worse if the global economy worsens, even lower than minus 5% is possible, Lee added.
The economy shrank by a revised 4.2% on a yearly basis in the fourth quarter after recording flat growth in the third quarter. All major sectors, apart from construction, information and communications, and business services experienced contraction.
Real gross domestic product declined 16.4% in the fourth quarter on a seasonally adjusted annualized quarter-on-quarter basis, following 2.1% decline in the previous quarter. According to an estimate released on January 21, contraction for the fourth quarter was 16.9%.
Two consecutive quarters of decline in GDP denotes a recession and the Singapore economy contracted for the third straight time in the fourth quarter.
The manufacturing sector dropped 10.7% in the fourth quarter. Growth in the construction sector eased significantly to 18.5%, weighed down by a sharp slowdown in industrial building activity. Meanwhile, the service producing industries as a whole contracted 1.3%.
Singapore had unveiled a major fiscal package in its budget on January 22 to brave the worst global economic decline in 60 years. The city-state economy is set to run its largest deficit in financial year 2009. The government decided to reduce the corporate income tax to 17% and to deliver Resilience Package worth US$13.7 billion this year.
In October 2008, considering the weakening external economic environment and easing inflationary pressures, the Monetary Authority of Singapore had shifted its monetary policy stance to zero per cent appreciation of the S$NEER policy band, without re-centering or altering the width of the band.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.