Singapore Economy Shrinks Most in at Least 33 Years
Singapore's economy shrank the most in at least 33 years last quarter as plunging exports push Asian nations deeper into an economic slump and add pressure for the nation to weaken its currency, Bloomberg reported.
Gross domestic product declined an annualized 16.4 percent last quarter from the previous three months, after shrinking a revised 2.1 percent between July and September, the trade ministry said in a report today. The contraction was less than a Jan. 21 estimate of 16.9 percent.
Singapore's dollar fell as the trade ministry said the growth prospect is "weak" this year and that any recovery would likely be gradual. The economy has contracted for three straight quarters, sliding into recession along with Japan, Hong Kong and New Zealand, and manufacturers such as Creative Technology Ltd. are cutting jobs.
"With the collapse in exports and industrial production, the weight will fall on the Singapore dollar to take the adjustment," said Thio Chin Loo, a senior currency strategist at BNP Paribas SA in Singapore. "We can expect the Singapore dollar to weaken."
The Monetary Authority of Singapore, which uses the currency to manage inflation, stopped favoring gains in the local dollar in October. Thio says the central bank may allow the exchange rate to weaken further in the next review in April by re-centering the policy band that the Singapore dollar is allowed to trade in.
The Singapore dollar fell 0.3 percent to 1.5322 against the U.S. currency as at 9:47 a.m. local time today. The currency may weaken to S$1.60 per U.S. dollar by the end of June, Thio said.