News Room - Business/Economics

Posted on 14 Feb 2008

Singapore's economic growth moderates in Q4 of 2007

Singapore's economy expanded 5.4 percent year-on-year in the fourth quarter of last year, falling short of the advance estimate for 6.0 percent growth, said the Ministry of Trade and Industry in a statement.

Compared to the third quarter, Singapore's gross domestic product fell 4.8 percent in the fourth quarter on a seasonally adjusted and annualised basis compared to an initial estimate for a 3.2 percent decline.

The Ministry also downgraded its economic growth outlook for this year, citing downside risks spawned by a slowdown in the United States.

Gross domestic product (GDP), the value of all goods and services produced in the country, is now expected to expand at a rate of 4.0-6.0 percent instead of 4.5-6.5 percent.

GDP climbed a revised 7.7 percent for the whole of 2007 after growing at 8.2 percent in 2006, it said in a statement.

For 2008, external conditions have worsened and downside risks have increased largely due to a slowdown in the world's biggest economy, the Ministry said.

"Compared to three months ago, there is broad consensus now that the US economy is entering a slowdown," it said.

"The key uncertainty is over the length and severity of this slowdown which will in turn influence how the rest of the world and key industries are affected.

"In view of the greater downside risks, MTI has revised the 2008 forecast for the Singapore economy to 4.0-6.0 percent, from the previous 4.5-6.5 percent."

GDP would grow in the upper half of the forecast range if the US economy enters a "mild recession" in the first half but recovers in the second half of the year, it said.

But if the US economy, a major market for Singapore's exports, slides into a "more severe recession" it will have a bigger impact on Asia.

In this scenario, GDP is likely to grow in the lower end of the forecast.

US economic growth slowed abruptly to a 0.6 percent annualised crawl in the fourth quarter of 2007 compared with 4.9 percent in the prior quarter and some economists believe the economy is sliding towards recession.