Singapore Exports to Decline as Asia Braces for Deeper Slowdown

By Shamim Adam

Aug. 11 (Bloomberg) -- Singapore said its exports will fall this year for the first time since 2001, as the city-state joined its neighbors in signaling a deepening economic slowdown.

The island's trade promotion agency today lowered its forecast for exports this year, saying they will drop between 2 percent and 4 percent, from an earlier estimate of a 2 percent- to-4 percent growth. Shipments fell 2.4 percent in the first half of 2008.

The U.S. housing recession that has roiled financial markets is hurting export demand and threatening expansion in a region the Asian Development Bank says will account for more than a fifth of global growth this year. Asian governments have lowered their 2008 growth forecasts since the start of the year as the global slowdown spreads and soaring prices hurt spending.

``U.S. consumption is declining sharply and the outlook for export demand will remain weak until 2009,'' said Takayuki Urade, head of Asia economics at Nomura Holdings Inc. in Singapore.

Australia's central bank today said it expects a ``significant moderation'' in domestic demand that will cut economic growth by half and drive up unemployment. Japan last week said the world's second-biggest economy is ``weakening'' for the first time since 2001.

In China, economic growth slowed for a fourth straight quarter in the three months to June 30, expanding 10.1 percent. Growth below 9 percent would be ``unacceptable'' for a government targeting 10 million new jobs a year, Credit Suisse Group said this month.

Weak Demand

``Weaker growth in the major economies, coupled with the need to contain inflationary pressures, will dampen growth in the fast-growing Asian economies,'' Singapore's trade ministry said today. It ``expects the electronics industry to remain soft in the second half of 2008, reflecting weak demand for semiconductors.''

Singapore's government on Aug. 8 cut its forecast for growth this year to between 4 percent and 5 percent, from an earlier estimate of as much as 6 percent expansion. Growth will be at the lower half of the new forecast, the trade ministry said today.

Gross domestic product increased 2.1 percent from a year earlier in the second quarter, after expanding 6.9 percent in the previous three months, the trade ministry said today. That compares with a preliminary estimate of 1.9 percent published on July 10.

``Singapore's economy has so far been partly buffered, because we have been carried along by the vibrancy of the Asian region,'' Prime Minister Lee Hsien Loong said Aug. 8. ``But Asian economies are starting to feel the impact of America's problems, and so are we. We must therefore prepare ourselves for a bumpy year ahead.''

Korea, Japan

South Korea on Aug. 7 said growth in Asia's fourth-largest economy is easing as consumer spending slows and higher fuel costs stoke inflation. An expansion of 4.8 percent last quarter was the weakest annual pace since the start of 2007.

The Reserve Bank of India last month lowered its economic growth estimate for the year ending March 2009 to 8 percent from a range of 8 percent to 8.5 percent as inflation at a 13-year high erodes spending by consumers and companies.

Gross domestic product in Japan probably shrank an annualized 2.3 percent in the three months ended June 30, according to a Bloomberg News survey. The figures will be released on Aug. 13.

The country's exports fell for the first time in more than four years in June as growth in shipments to Asia and China eased, signaling the U.S. slowdown is spreading to the emerging markets that helped sustain expansion.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net