Like the suspended Singapore Flyer, experts are trying to figure out how to rectify the Republic’s economy which is grinding to a halt. The government warned that Singapore’s economy is now expected to grow no more than 1% and could contract by up to 2% in 2009 after GDP fell a seasonally-adjusted 12.5% during the October to December period from the previous quarter.

The latest forecast by the Trade and Industry Ministry is lower than the -1% to 2% range forecast made earlier in November 2008. The Prime Minister in his New Year message said that Singapore’s GDP for this year should come in at 1.5%, the slowest pace in seven years, compared with 7.7% in 2007.

The statement from the Ministry of Trade and Industry said the sharp declines in global demand, trade and investments will reverberate across all sectors of the Singapore economy. While the manufacturing, wholesale trade, transport and retail sectors get direct hits, the financial services will continue to be dragged down by weak markets and credit growth. The slowdown will in turn spread domestically to the property and business services.

Graphic: Business Times