Singapore shrank 10.1% is one of the worse
performing economies in Asia, Japan shrank 4%, Australia 0.5% and
Hong Kong 4.3%.
May 21 (Bloomberg) -- Singapore’s government said the economy
shrank less than initially estimated last quarter and a second
stimulus package may not be needed as the nation emerges from the
deepest recession in its 44-year history.
Gross domestic
product declined an annualized 14.6 percent last
quarter from the previous three months, after shrinking 16.4
percent between October and December, the trade ministry said in a
statement today. The initial estimate on April 14 was for a 19.7
percent drop.
Singapore joins other Asian nations in showing signs it may be
past the worst of its yearlong export slump. The Bank of Japan may
raise its assessment of the economy for the first time since July
2006 tomorrow, even after a report showed a record contraction in
the first quarter, economists say.
“The economy probably reached the trough last quarter but the
‘green shoots-of-recovery’ story will have to wait a bit longer,”
said
Selena Ling, head of treasury
research at Oversea-Chinese Banking Corp. in Singapore. “The pace
of declines may ease but the second quarter will still be a weak
one for Singapore.”
The worst global recession since World War II has battered
Singapore’s exports, forcing companies including
Chartered Semiconductor Manufacturing
Ltd. to fire a record number of workers on the
island and prompting the government to cut taxes and hand cash to
businesses to help them cope with the slowdown.
Prime Minister
Lee Hsien Loong’s government
expects the economy to shrink as much as 9 percent in 2009, the
most since independence in 1965. The International Monetary Fund
predicts a 10 percent contraction, the worst performance in
Asia.
Second Stimulus
“We seem to have hit the bottom and things are not likely to get
worse from this point on,” Ravi Menon, an official at the trade
ministry, told reporters today. The economy is “not likely” to need
a second stimulus package this year because things haven’t
worsened, he said.
The Singapore dollar rose 0.4 percent to S$1.4557 against the
U.S. currency at 11:37 a.m. local time. The island’s currency is
the worst performer in Asia after the Malaysian ringgit among 10
currencies outside Japan, declining 0.8 percent this year.
The Monetary Authority of Singapore
said last month it would adjust the trading range for the Singapore
dollar, a move economists say effectively devalued the
currency.
The Singapore dollar’s behavior “is consistent with the policy
stance and we’re comfortable with the Singapore-dollar price
action,”
Ong Chong Tee, a central bank
deputy managing director, said at a press briefing today.
Slow Recovery
Singapore’s economy will make a “slow and gradual” climb out of
the recession, rather than a “decisive rebound” this year, the
central bank said last month. Taiwan may say today its GDP probably
shrank at an unprecedented pace last quarter as exports to the U.S.
and China fell, according to a Bloomberg News survey.
The global economy is probably “nearing the turning point,”
Don Hanna, a New York-based
economist at Citigroup Inc., said in a note yesterday, predicting a
“subdued” recovery.
“We have probably seen most of the vulnerability already,” Nobel
Prize-winning economist
Paul Krugman said in Ho Chi
Minh City yesterday. “I don’t think we are going to get any more of
big shocks from the U.S., Western Europe, Japan or China. My
concern has shifted to how do we hold up if we have the world
economy that stays depressed for a long time.”
Jobless Rate
Singapore’s $161 billion economy contracted a revised 10.1
percent last quarter from a year earlier. Manufacturing, which
accounts for a quarter of the economy, fell 26.1 percent, less than
the 29 percent decline estimated on April 14.
Services shrank a
revised 5.2 percent while
construction gained
a revised 24.4 percent.
Employers fired a record 12,600 workers last quarter in
Singapore, pushing the
jobless rate to the
highest in more than three years. Electronics exports have dropped
every month for more than two years, and the financial services
industry is shrinking after the global credit crisis.
Singapore’s financial industry will probably shrink this year
compared with 2008 even amid signs of some improvement in lending
in the first quarter, the central bank’s Ong said.
The
economy may
contract 6 percent to 9 percent this year, the trade ministry
reiterated today. Consumer prices are forecast to remain unchanged
or fall 1 percent in 2009, and non- oil domestic exports may plunge
as much as 13 percent.
“While trade is still expected to be weak for the rest of 2009,
further declines of the magnitude seen earlier this year seem
unlikely,” the ministry said. “Any new risk, such as an acute
worsening of the Influenza A (H1N1) situation or undisclosed
weaknesses in U.S. or European banks coming to light, could set
back the process of economic recovery by several quarters.”
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