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Singapore cuts forecasts for economy, exports

Singapore cuts forecasts for economy, exports

August 10th, 2011 by ALEX KENNEDY, Associated Press in News

SINGAPORE (AP) - Export reliant Singapore cut its 2011 economic growth and trade forecasts Wednesday amid growing fears consumer demand from the U.S. and Europe could be weaker than previously expected.

Gross domestic product should grow between 5 percent and 6 percent this year, down from a previous forecast of as much as 7 percent, the Trade and Industry Ministry said.

The ministry also reduced its growth forecast for non-oil domestic exports to between 6 percent and 7 percent from an earlier prediction of between 8 percent and 10 percent.

"Concerns of a double-dip recession in the U.S. have emerged, as upcoming plans for fiscal consolidation and weak labor and housing markets dampen consumer and business sentiments," the ministry said. "The recent downgrade of the U.S. sovereign debt rating has led to financial market volatility and increased uncertainties."

Singapore's economy - which relies on manufacturing, tourism and finance - is one of the most sensitive in Asia to global growth. The city-state suffered a brief but sharp recession in the first half of 2009 in the wake of the global financial crisis, but roared back with 15 percent growth last year.

The city-state's economy grew 0.9 percent in the April to June period from a year earlier, more than the 0.5 percent growth in preliminary results released last month, the ministry said. The economy contracted a seasonally adjusted and annualized 6.5 percent from the first quarter, better than the 7.8 percent drop initially announced.

Manufacturing slid 5.9 percent in the second quarter from a year earlier while services grew 3.9 percent and construction expanded 1.5 percent, the ministry said.

Non-oil domestic exports grew 2.1 percent last quarter after jumping 12 percent in the first quarter, weighed down by a 11 percent drop in demand for electronics in the first half, the ministry said.