Singapore

The rate of growth dropped abruptly in Singapore, from 7.7% in 2007 to 1.2% in 2008, the lowest since 2001.
Exports dropped significantly towards the end of 2008: -4.3% in October (year-onyear), -11.9% in November, -20.4% in December, and -37.8% in January 2009.
With the exception of government consumption, domestic demand lost dynamism in 2008 compared to the year before:

The rate of growth of gross fixed investment dropped from 19.2% in 2007 to 13.7% in 2008.
The rate of growth in private consumption slowed down markedly from 5.2% in 2007 to 2.4% in 2008.
But the rate of growth of government consumption increased from 2.3% in 2007 to 9.6% in 2008.

Reflecting the dramatic increases in international commodity markets until July of 2008, Singapore’s inflation rate increased from 2.1% in 2007 (year-on-year) to 6.5% in 2008.
However, inflation decelerated fast towards the end of 2008, as the price of crude oil and other commodities plunged, reaching 2.9% in January 2009.
Given the weakening global demand for Singapore exports and easing of inflation due to the drop in commodity prices, the Monetary Authority of Singapore announced in October 2008 that it was shifting its monetary policy stance to a zero percent appreciation of its target exchange rate.
The Singapore dollar depreciated from an average of 1.4 US dollars in the first three quarters of 2008 to an average of 1.5 US dollars in the fourth quarter of that year and the first two months of 2009.
Singapore held $174b in foreign exchange reserves as of the end of December 2008, up from $163 billion a year before.

Singapore’s budget surplus decreased from 3.4% of the GDP in 2007 to 0.9% in 2008.
On January 2009 the Singapore’s cabinet approved a stimulus package of S$20.5 billion ($13.7 billion, 11.5% of the GDP) which includes the following elements:

Jobs credit scheme: cash transfers for employers to cover part of their wage bills and avoid mass lay-offs (S$4.5 billion).
Special risk-sharing initiative: Government guarantees to working-capital loans (up to S$5 million) to individual firms to stimulate bank lending.
Cut in corporate tax rate from 18% to 17%.
Personal income tax rebates of 20% of taxes due (capped at S$2,000).
The Government plans to draw down S$4.9 billion from previously accumulated reserves to finance the jobs credit programme and the special-risk sharing initiative programmes; it will also tap reserves held by the Monetary Authority of Singapore and the Government of Singapore Investment Corporation.

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