Singapore economy ranks worst in Asia


The new estimate matches Goh Chok Tong's forecast after Singapore stocks closed down 15.7 percent for the year

By staff and wire reports

SINGAPORE -- Singapore said Wednesday that early estimates show its economy shrank 2.2 percent in 2001.

That matches a forecast made by Prime Minister Goh Chok Tong after Singapore's stock market closed for the year on December 31.

It also ranks the city-state as the worst performing economy in Asia. Recession has hit particularly quickly and hard.

Taiwan, which is similarly dependent on exports and technology products, is in similar straits and expected to see its gross domestic product shrink somewhere between 2.0 and 2.2 percent this year.

At the other end of the scale, China's official estimate of 7.3 percent growth for the year is the best in the world.

This is Singapore's worst recession since it split from Malaysia in 1964. The government said early estimates suggest the fourth quarter shrank 7.0 percent, over the same time last year.

Stocks off to bad start in city

The figures, from the Ministry of Trade and Industry, are slightly better than expected.

A Reuters survey of five economists produced an average forecast of an 8.2 percent GDP contraction in the fourth quarter and 2.42 percent fall overall in 2001.

But the aftermath of the September 11 attacks, as well as a slowdown in demand from the United States and Japan, likely means Singapore will continue to struggle much of this year.

The unemployment rate is expected to rise to 4.5 percent early in 2002.

As its companies took the downturn on the chin, Singapore's stock market fell 15.7 percent in 2001. Investors now say they see some signs of recovery.

But the Straits Times index started 2002 on a down note. It was down 0.63 percent at 1,613.32 in mid-morning trade, after closing for the New Year's holiday.

The Singapore dollar has weakened to levels not seen since 1990, as the Japanese yen lost ground against the U.S. dollar.

But it strengthened slightly after the government forecast for GDP, and was trading at 1.8492 against the American currency shortly before 11 a.m. local time.

Reuters contributed to this report.