SINGAPORE - Singapore on Friday raised its economic growth forecast this year as countries that buy most of its exports emerge from recession.
The upgrade from 3.0-5.0 percent to 4.5-6.5 percent came after
economic growth gathered pace in the fourth quarter, allowing the
economy to contract by a slower-than-predicted 2.0 percent for 2009,
the Ministry of Trade and Industry said.
But the ministry said the outlook is fraught with uncertainty,
especially in the second half of the year with the recovery in the
United States, Europe and Japan expected to be weaker.
Debt risks in some European countries are also potential minefields for economic growth, it said.
"The Ministry of Trade and Industry expects the Singapore economy to
grow by 4.5 to 6.5 per cent in 2010. This upgrade from the earlier 3.0
to 5.0 per cent forecast largely reflects increased strength in the
near term growth momentum," the ministry said in a statement.
"Major economies around the world have emerged from recession.
Financial markets have stabilised and trade flows and industrial
production have also picked up strongly.
"Asia should experience a strong recovery, but the pace of the rebound
in the United States, Europe and Japan, collectively called the G3
countries, is likely to be weaker.
"In addition, several downside risks remain, including sovereign debt
risks (especially in Europe) and asset price inflation in Asia. These
factors could weigh on the pace of growth in major economies,
especially in the later part of 2010," the ministry said.
Singapore slipped into recession in the third quarter of 2008 after
being hammered by the global economic crisis that followed the collapse
of US investment bank Lehman Brothers.
There had been fears the economy in 2009 would post its worst contraction since independence more than 40 years ago.
But the recovery was faster than many had predicted and Singapore declared the recession over in November last year.
Singapore's worst recession since gaining independence in 1965 took place in 2001 when GDP shrank 2.4 percent.
- AFP/vm