The Singapore economy contracted worse than expected in the first three months of 2008, the Ministry of Trade and Industry said in a preliminary report on Tuesday, plummeting by a seasonally adjusted 19.7 percent compared to the previous quarter. This was far below analyst expectations for a 9.0 percent decline following the 16.9 percent fall in the previous quarter.
On an annual basis, GDP was off 11.5 percent versus expectations for an 8.9 percent decline after the 3.7 percent contraction in the previous quarter.
Among the individual components, manufacturing dropped 29 percent on year, while construction was up 25.6 percent and services producing industries eased 5.9 percent.
Falling external demand in late 2008 and early 2009 has severely affected domestic manufacturing output, the MTI said in a statement. With most of Singapore's key trading partners still in recession, the manufacturing sector will continue to remain weak for the rest of the year.
Hotels and financials also were weaker, while construction - the only sector to gain - was supported by a strong pipeline of committed projects in both housing and infrastructure, the MTI said.
As a result of the data, the Monetary Authority of Singapore lowered its GDP forecast for the year to between minus-6 to minus-9 percent. In January, the MAS had estimated a decline of between 2 and 5 percent.
The global economy is expected to remain weak in the coming quarters, the MTI said. While there are tentative signs of some stabilization in the housing, financial and manufacturing sectors in the U.S., they do not point to a clear turnaround in economic activity . Taking into account the sharp deterioration in the first quarter of 2009, and the weak global outlook for the rest of the year, MTI is revising the economic growth forecast for 2009 to -6.0 percent to -9.0 percent.
Singapore's economy grew 1.1 percent in 2008 and 7.8 percent in 2007.
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