12 Oct, 2012

Singapore economy contracts 1.5%

12 Oct, 2012

Singapore’s economy contracted in the July to September period, but has narrowly avoided a technical recession.    Asian countries have seen growth slow as a result of dwindling exports to Europe, the US and China.    Gross domestic product shrank 1.5% compared with the previous three months, the Ministry of Trade and Industry said.   However, growth in the April to May quarter was revised from a contraction of 0.7% to slight growth of 0.2%.

Many analysts were expecting the government to step in and loosen monetary policy to weaken the Singapore dollar.   A strong dollar makes exports more expensive overseas, cutting into the profits earned by exporters.   However, the Monetary Authority of Singapore (MAS) said it would maintain its policy of allowing a modest and gradual appreciation of the currency.

The Ministry of Trade and Industry said Singapore was still on track to achieve the target growth of between 1.5% and 2.5% for the year.

Credit: BBC/Reuters