World

Singapore slips into recession

by Sanjay Jha | October 9, 2008 at 11:01 pm

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Singapore, one of fastest growing and robust economy of Asia, is deeply under threat. The Singapore economy has weakened over the course of 2008, alongside an escalation in the turmoil in financial markets and a more severe deceleration in global economic activity. Singapore's export-oriented sectors, such as manufacturing, will be affected, noting that Europe is also facing severe strains in the banking sector, tighter credit conditions, and adjustments in housing prices.

The fresh economic developments meant new uncertainties for the Singapore economy. Government of city state today loosened its monetary policy for the first time in more than four years, citing the global financial crisis and lower domestic growth as well as easing inflation and expecting to weather the financial turbulence.

SINGAPORE'S economy has slid into its first technical recession since 2002, as a slump in exports pushed quarterly growth into negative territory for the second quarter in a row.

The economy shrank by a worse-than-expected 0.5 per cent in the third quarter compared to the same period last year, according to estimates from the Ministry of Trade and Industry (MTI) released on Friday morning.
MTI has also revised its full-year growth forecast for the second time this year, lowering it to 'around 3 per cent' from 4 to 5 per cent previously. This would make it the weakest pace in seven years.
Recognising growth concerns, the Monetary Authority of Singapore also changed its policy stance to zero appreciation of the Singapore dollar, reversing the gradual appreciation policy it has adopted since 2003.
On a quarterly basis, third-quarter GDP contracted 6.3 per cent from the second quarter, on top of a 5.7 per cent decline in the previous three months. A technical recession is generally defined as two consecutive quarters of decline.
Manufacturing led the slowdown again this time around, weighed down by a poor performance in the biomedical sciences segment. It was also hit by weakened global demand for exports as the United States-triggered financial crisis spreads around the world.