The Singapore economy has shrunk for the first time in eight years, contracting 2.1 per cent in 2009. The economy grew 0.6 per cent in the third quarter only to end in worse shape than in 2008, when the gross domestic product rose merely 1.1 per cent.
This is only the fifth time the economy has shrunk, according to Statistics Singapore records going back to 1960.
The economy last shrank in 2001, when GDP fell 2.4 per cent, but it bounced back, growing 4.1 per cent the following year, when Senior Minister Goh Chok Tong was still prime minister. The other lean years were 1985, when GDP fell 1.5 per cent; 1998, when there was a 1.4 per cent drop; and 1964, when the economy shrank 3.8 per cent.
Will Prime Minister Lee Hsien Loong mastermind another economic rebound? The official forecast is 3 to 5 per cent growth this year.
But the economy seems to be running out of steam, growing only 3.5 per cent in the fourth quarter compared with the same period last year after double-digit gains in the second and third quarters. The economy
grew 21.7 per cent in the second quarter compared with the first
quarter and 14.2 per cent in the third quarter compared with the second
quarter, according to the Ministry of Trade and Industry’s third
quarter report released in November.
That was how the economy ended up growing 0.6 per cent in the third quarter compared with the previous year. But a weak fourth quarter has pushed the economy back into the downward spiral that has plagued the rest of the year.
East Asia as a whole has been growing much faster than Singapore, according to the Asian Development Bank. The December issue of the Asia Development Monitor says:
The combined gross domestic product (GDP) of the 10 largest economies in emerging East Asia grew 5.0% year-on-year in the third quarter of 2009, well above growth rates in the previous three quarters.
That was well above Singapore's 0.6 per cent third quarter growth. China's phenomenal 8.9 per cent third quarter growth boosted East Asia as a whole.
But Vietnam, Indonesia and South Korea also did better than Singapore, as this chart shows. It's taken from the Asia Development Monitor.
The five other nations are Malaysia, Taiwan, Hong Kong, Thailand and the Philippines. The green bar shows third quarter performance and the orange bar, first quarter. The only exception is Indonesia, where the orange bar indicates second quarter performance because that's when the economy bottomed out, says the report.
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