Singapore's descent sharper than expected

Singapore's descent sharper than expected

SINGAPORE (AFP): The Singapore economy turned negative in the second quarter for the first time since the Asian financial crisis with growth contracting by 0.9 percent, the government said Friday.

The grim year-on-year figures were reflected in the employment statistics which showed 5,600 job losses, 72 percent higher than the 3,248 retrenchments in the first quarter.

The ministry of trade and industry said the forward-looking indicators point to continued weakness in the Singapore economy, but it was maintaining its full-year growth forecast of 0.5 to 1.5 percent.

The 0.9 percent contraction in gross domestic product (GDP), telegraphed by Prime Minister Goh Chok Tong is his somber National Day message this week, was worse than last month's initial estimate of 0.8 percent shrinkage.

In the first quarter, GDP rose a revised 4.7 percent year-on- year.

With the country in recession due to weak global demand, especially for electronics, the ministry of trade and industry said all sectors of the economy registered slower growth except for financial services.

The crucial manufacturing sector, which had double-digit growth in 1999 and 2000, contracted by a sharp 9.6 percent in its worst performance in 16 years.

"This was due mainly to the electronics products industry which deteriorated further to fall by 19 percent. All key segments, except computers, saw negative growth," the ministry said in a statement.

Almost 9,000 workers have been laid off so far this year and the worst is yet to come.

"Unemployment is likely to rise further in the months ahead as the full impact of the economic downturn filters into the labor market," the trade ministry said.

The weakening external outlook will have a significant impact on trade-dependent Singapore with its heavy reliance on technology exports.