Singapore economy shrank in first quarter

Singapore's Ministry of Trade and Industry reported today that the economy shrank 5.8 percent in the first quarter on a quarter-on-quarter seasonally-adjusted annualised basis. Compared to the first quarter of 2004, the economy grew 2.4 percent.

This is a sharp reversal of the annualised 7.9 percent in the fourth quarter of 2004, and was mainly due to the slowdown in manufacturing.

The outlook for the coming months is not good. As I mentioned earlier, Singapore's purchasing managers' index slipped in February. And last Friday, the OECD said that the outlook for economic growth in the OECD area has worsened, with falls in its leading indicators for the US, the euro zone and Japan, although economists polled for the April issue of Blue Chip Economic Indicators put US economic growth at 3.7 percent this year, unchanged from last month.

However, Morgan Stanley economists have recently suggested that the slowdowns in Europeand the US may be temporary.