Page last updated at 09:37 GMT, Monday, 4 January 2010

Singapore economy sees contraction

Singapore's financial district
Singapore saw negative growth across 2009 as a whole

Singapore's economy shrank for the first time in three quarters in the last three months of 2009.

Weaker manufacturing helped the economy shrink by an annualised rate of 6.8% in the fourth quarter of the year, the island's government said.

That compares with a 14.9% rise in the third quarter, following Singapore's deepest recession on record.

However, the economy still grew by 3.5% when compared with the same three-month period in 2008.

Over 2009 as a whole, the economy shrank by 2.1%.

Speaking last week, Singapore's Prime Minister Lee Hsien Loong said the economy was still improving after a "volatile" year.

He added that the stabilising of global economies would help future recovery.

Mixed picture

Weakness in the manufacturing sector, which accounts for about a quarter of the economy, contributed to the decline in GDP.

"This decline was mainly due to a contraction in the output of the biomedical manufacturing and transport engineering clusters," the trade ministry said in a statement.

Mariko Oi, the BBC's business correspondent in Singapore, said that some economists had expected a contraction.

"The saviour of Singapore's economy - the pharmaceuticals sector - is very volatile," she said.

"But if you look at export figures, things are picking up. They rose for the first time in 19 months in November, and as exports account for two-thirds of the economy, that's good news."

She added that the government was continuing to take a cautious approach, and would hold back from tightening monetary policy until later in the year.

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