SINGAPORE, March 19 (Reuters) - Major investment banks slashed growth forecasts for Southeast Asian economies, with one predicting an 8 percent contraction in Singapore, as the weakening global economy hits the region's key export industry.
Goldman Sachs now expects Singapore's gross domestic product to fall 8 percent this year from a previous forecast for a 4 percent contraction hurt also by a slowing real estate market and shrinking investment.
It also cut its GDP forecasts for 2009 for four other Southeast Asian economies. Among them, its sharpest downward revision was for Malaysia to shrink 3.5 percent from growth of 1.7 percent previously, while it saw Thai GDP slipping 4 percent from a 0.8 percent drop previously.
Indonesia's economy was expected to grow at a slower pace of 2.5 percent from 3.0 percent previously, and the Philippine economy was expected to shrink 0.5 percent from a growth forecast of 1.8 percent previously, Goldman said in a note on Thursday.
"We reiterate our view that Singapore has one of the highest exposures to weakness in external demand, because of its high ratio of exports to GDP and the high portion of exports-driven domestic demand," it said.
HSBC lowered growth forecasts for Singapore to -7 percent and for Malaysia to -3.5 percent, from -5 percent and +0.5 percent previously.
Credit Suisse saw a 6.5 percent contraction for Singapore, a 5.2 percent contraction for Japan as frozen trade hits exporters, but 8 percent growth for China given its policy stimulus.
Goldman's forecast on Singapore is the most bearish among private economists, although Singapore's most powerful politician, Lee Kuan Yew, told a Reuters seminar earlier this month the economy could contract by as much as 10 percent in 2009 if exports continued to slide in the second quarter.
A poll of analysts by Reuters on Wednesday [ID:nBKK465713] put the average forecast for Singapore at a 4.9 percent contraction <SGGDP1>, in line with the government's official forecast and a survey of economists by the central bank.
Goldman saw the Singapore dollar <SGD=> at 1.64 to the U.S dollar within 3 months while HSBC expected a 2-3 percent one-off shift downwards in the band, with scope to ease policy again. (Reporting by Nopporn Wong-Anan; Editing by Neil Chatterjee & Kazunori Takada) ((nopporn.wong-anan@reuters.com; +65 6403 5677) Keywords: SINGAPORE ECONOMY/GOLDMAN
