Friday, the Singapore dollar slumped to an 11-day low against the currencies of US and Hong Kong as the Singapore government lowered its GDP forecast for 2009, citing the worsening global recession and foreshadowing a deepening slump throughout the region. The Ministry of Trade and Industry said today that the Singapore economy is expected to grow between minus 2% and 1% in 2009, lower than the minus 1% to 2% range it had forecast in November 2008. In the fourth quarter of 2008, on an annualized quarter-on-quarter basis, real GDP fell by a seasonally adjusted 12.5% compared to a decline of 5.4% in the third quarter of 2008. According to MTI, the manufacturing sector declined 9% due to the sharp drop in the output of electronics and precision engineering. The economy expanded 1.5% in 2008, compared with 7.7% in 2007. The latest estimate is lower than MTI's forecast of around 2.5% in November 2008. In his New Year message, Singapore's Prime Minister Lee Hsien Loong said 2008 has been an eventful and challenging year and the world is entering the most serious economic crisis in sixty years. "The global financial system has seized up, companies are finding it harder to obtain credit, and economies everywhere are slowing down," Lee said. Lee noted that the economy will probably contract in 2009 and urged the nation to prepare for a difficult year, especially the first half of 2009. More companies will be forced to downsize. "So far we have not seen many job losses, but I expect more retrenchments in the next few months." According to him, a quick rebound is not possible after the global recession. It will take several more years of slow growth. Mr. Lee said the government will introduce in the 2009 budget more measures to help companies with costs, including rents and wage bills, and will provide further financing support. These measures are in addition to steps already taken, such as enhancing government financing programs for companies and reducing interest rates. Singapore is among the first in the region to report fourth-quarter figures, providing an insight on how the credit crunch and the worldwide recession is affecting Asia's economies. The export-dependent nation has been battered by declining orders for electronic goods and pharmaceuticals from its biggest customers in the U.S. and Europe, as well as emerging nations. The World Bank last month predicted international trade will shrink in 2009 for the first time in more than 25 years.

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