Singapore Says 2008 Economic Growth May Miss Forecast

By Shamim Adam

Dec. 16 (Bloomberg) -- Singapore’s economic growth this year may miss the government’s forecast as the global economy worsens amid a credit crisis, Trade Minister Lim Hng Kiang said.

“The economy is very volatile and very vulnerable to global conditions,” Lim told reporters in Singapore today. “We believe that the growth for this year will come slightly below our earlier projections of 2.5 percent because since September there has been an unprecedented drop in world-market conditions.”

Still, the nation’s monetary policy stance is conducive to growth, he said. The central bank in October ended a policy favoring gains in its currency in an effort to support the economy as inflation eased from a 26-year high.

The island’s economy has contracted for two straight quarters and companies such as DBS Group Holdings Ltd. and Parkway Holdings Ltd. have announced job and wage cuts. The export-dependent country has been battered by declining orders from its biggest customers in the recession-hit nations of the U.S. and Europe, as well as emerging markets.

“We are looking at a very difficult trade environment,” Lim said. The World Bank last week predicted international trade will shrink in 2009 for the first time in more than 25 years. Singapore predicts overseas shipments will fall as much as 7 percent this year, and decline by as much as 1 percent in 2009.

The economy may shrink by as much as 1 percent next year, the first contraction since 2001, or grow as much as 2 percent, Lim said, reiterating the trade ministry’s forecasts last month.

Some parts of the economy will withstand the crisis and support growth, Lim said, citing committed company investments and new factories that will start production next year.

Businesses and consumers may also benefit from next year’s government budget, which will be announced on Jan. 22, he said.

“We are looking toward the budget to having a fiscal policy that is also pro-growth,” Lim said.

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