Economists see S'pore GDP falling 8.5% in Q1

Forecasters polled by MAS hazard 3.3% GDP growth for 2010

(SINGAPORE) The economy looks headed for another record contraction in the current quarter, with economists forecasting an 8.5 per cent fall in GDP for the period.

Economists polled late last month by the Monetary Authority of Singapore forecast the economy shrinking by between 6 and 10.7 per cent in Q1, with all key sectors, except construction, posting negative numbers.

The median forecast from the 20 economists is an 8.5 per cent GDP decline, which would be not just markedly worse than the preceding Q4's 4.2 per cent fall but also the previous low of 6.5 per cent decline in Q3 2001.

The MAS survey, which was sent out on February 26, seeks forecasts on only a year-on-year basis, not quarter-on-quarter terms.

In three successive quarters of q-o-q decline, GDP growth slowed to just 1.1 per cent in 2008.
The economists polled also see another two quarters of year-on-year GDP declines in Q2 and Q3 - of 6.9 and 4.6 per cent respectively - before a 0.5 per cent rebound in Q4.

Year-round, GDP is projected to contract close to 5 per cent: the forecasts average -4.8 per cent, with a -4.9 per cent median.

This current forecast of 2009 GDP growth - compared to an estimate of -1 per cent in the previous poll in December 2008 - is of course at the tail end of the official estimate of 2-5 per cent contraction for the year.

But senior leaders have since come out to say that the economy could well sink by 8-10 per cent this year - if Singapore's exports tank sharply by a third or more.

In the MAS poll, the economists thought it most likely that the economy would shrink by 5-5.9 per cent this year, with a 20 per cent chance seen in a contraction of 6-6.9 per cent.

Both the manufacturing and financial services sectors are expected to post double-digit declines in the current Q1 - manufacturing by about 20 per cent, financial services about 11 per cent.

Meanwhile, the inflation rate - which averaged 6.5 per cent in 2008 - is expected to ease to just 0.2 per cent by year-end. But it will then rachet up again to 1.7 per cent in 2010, the economists reckon, when GDP growth for the year should rebound to, they hazard, 3.3 per cent.

Source: Business Time, 17 Mar 2009