Friday February 15, 2008

Singapore 2007Q4 GDP contracted 4.8%, 2008 economic growth forecast lowered

This article belongs to the Singapore stagflation watch story arc.

bloomberg.com :

Singapore lowered its 2008 growth forecast and said the economy risks falling into recession as a slowdown in the U.S. erodes global demand for the island's goods. Gross domestic product will probably increase by between 4-6% this year, lower than an earlier estimate of between 4.5-6.5%, the Trade Ministry said in a statement today [14 Feb 2008].

Singapore's economy shrank more than the government expected last quarter as the output from drug factories fell and electronics exporters faced their worst slump since 2002. The economy shrank an annualized 4.8% last quarter from the previous three months. The government had been estimating a 3.2% contraction. Finance Minister Tharman Shanmugaratnam will announce plans to boost the economy and alleviate the effect of accelerating inflation on households when he delivers the budget tomorrow [15 Feb 2008].

Prime Minister Lee Hsien Loong's government is battling the fastest inflation in a quarter of a century while trying to keep the island's economy expanding amid signs the U.S., its biggest market, may slip into a recession. Singapore's monetary authority expects the inflation rate will accelerate to between 4.5-5.5% this year, after averaging 2.1% in 2007.

- GDP contracting 4.8% - that is a real slowdown. Also notice how, like elsewhere, recession is being mentioned. It's a bit hard to have fiscal stimulus, though, without creating more inflation, and it is this combination of slowing growth and increasing inflation that will lead us straight into stagflation.

See also :

1. Singapore economy shrinks first time since 2003
2. Singapore GDP unexpectedly shrinks on weaker output
3. Singapore CPI inflation hits new 25-year high of 4.4% in December
4. Singapore : Inflation rate could push past 6% in Q1 2008

(2008-02-15 08:09:26 SGT) [Biz] Permalink

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