S'pore should avoid 'harsh contraction'

S'pore should avoid 'harsh contraction'

SINGAPORE (Reuters): Singapore should avoid a harsh economic contraction in 1998 to see growth sit within the government's forecast of 0.5 percent to 1.5 percent expansion, U.S. embassy officials said in a report yesterday.

"The Singapore economy should be able to avoid a contraction for 1998 as a whole, provided the regional crisis does not take a severe turn for the worst," said the July report from the embassy's economic and political section.

"We believe that Singapore's full year 1998 GDP (gross domestic product) growth rate should settle within the government's revised estimate of 0.5 percent to 1.5 percent."

The report said negative growth should be sidestepped by modest second half growth in construction, finance and business services, transport and communications.

But the crisis would take its toll on inward investments to Singapore, particularly in the manufacturing sector which attracted foreign commitments of about US$4 billion in 1997, some 40 percent or US$1.6 billion of which came from the United States, the city state's biggest foreign investor.