POOR PERFORMERS: Singapore
Singapore’s open economy is being battered by the global crisis. We are now expecting the city-state’s GDP to contract by 2.9 per cent in 2009, following estimated growth of just 1.9 per cent in 2008. Exports are set to contract as demand in the US and most of Singapore’s other important markets stagnates.The prospects for Singapore’s crucial technology sector – which depends on electronics exports – are looking particularly poor. But it is not only the external economy that will be troubled in 2009.
We also expect growth in private consumption, which accounts for about two-fifths of economic activity, to weaken sharply, primarily because of the deteriorating labour market and tight credit conditions.
To be sure, the government will spend vigorously to prop up domestic demand. A spike in government consumption should help to offset a drop in private-sector investment growth.
But policy makers in Singapore, as elsewhere in Asia, face a severe test of their capacity to avert a deep and prolonged recession.
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