SINGAPORE: Singapore said yesterday its export-driven economy contracted a better-than-expected 10.1 per cent year on year in the first quarter but warned it saw no clear signs of a quick recovery.
The trade ministry maintained its forecast for the economy to shrink between 9 and 6 per cent for the whole of 2009 as the city-state grapples with its worst recession since independence 44 years ago.
Despite the steep drop, it was better than the 11.5 per cent fall earlier tipped by the government.
In the three months to March gross domestic product (GDP) fell 14.6 per cent compared with the previous quarter on a seasonally adjusted basis.
However, this was also smaller than the government estimate of a 19.7 per cent drop and better than the 16.4 per cent decline recorded in the December quarter, the trade ministry said.
Analysts and the government said GDP may have hit bottom, but recovery may take a while.
Singapore's fortunes remain dependent on the health of the world's major economies, which buy much of its exports, including microchips and pharmaceuticals.
The economy fell into recession late last year as the global economic downturn accelerated but still managed to grow 1.1 per cent over the 12 months.
"The reason we have a forecast range of minus 6 to minus 9 per cent (GDP decline) is because we really don't know," Ravi Menon, second permanent secretary at the trade ministry, said at a briefing.
"What we are a little surer of is that we have probably seen the bottom.
But what we do not know is whether we are going to stay at the bottom for a little bit longer or whether we are going to start having a decisive rebound." Menon said there was no need for another stimulus "at this point in time" after a US$20.5 billion (US$1 = RM3.53) package unveiled by the government in January.
"The situation has not worsened since the last reading," he said, adding that "things are not likely to get worse from this point on." The key manufacturing sector contracted by 26.6 per cent from the previous quarter's shrinkage of 21.3 per cent as the global downturn hurt demand for exports.
Services, another pillar of the economy, contracted 10.3 per cent quarter-on-quarter as tourism-related arrivals tumbled, but the decline was less than the 15 per cent fall in the three months, the ministry said.
"Despite the ugly data, the good news is that first quarter 2009 could mark the very deep bottom of this economic cycle," said economist Song Seng Wun of CIMB-GK.
"Year-on-year GDP contractions should narrow even if we do not see sequential improvements in the next few quarters, as year-ago bases are less challenging." - AFP
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Comment:
The Public Relation strategies employed by Malaysia and Singapore appear to be very contrasting.
It does appear that politicians in Singapore have a tendency to err on the conservative side. With that strategy, I suspect that they would not be ridiculed too much when the official results are announced. After all, it is better than "we" predicted!
In Malaysia, it is quite a direct opposite. Politicians here in Malaysia have a tendency to paint a rosier picture. However when the official results are published a lot of explanations are required.
Interesting...? I think so.
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