ECONOMISTS have painted a grim picture of the economic outlook here, warning that Singapore will not be unscathed by the financial carnage sweeping rapidly across the United States and Europe.

'This downturn will be unlike previous downturns,' CIMB-GK economist Song Seng Wun told about 100 senior and middle-management staff of small businesses yesterday at a business outlook seminar organised by the Singapore Business Federation (SBF).

REINING IN EXPENSES 'I've a concern that the market will just... contract, and people will stop spending.' PASR Technologies' commercial director Max Collins, whose company is more careful with expenses these days ... more

'The private consumption slowdown in the US and Eurozone may have a significant knock-on impact on the rest of the world.'

Mr Song believes the expected sharp fall in global trade and financial flows could lead to Singapore's worst economic performance ever.

He predicted that in the worst-case scenario, Singapore's economic output could shrink between 3 per cent and 5 per cent next year from this year.

OCBC Bank economist Selena Ling was less pessimistic but maintained that the Government was likely to downgrade its official economic growth forecast of 4 per cent to 5 per cent for this year.

The Ministry of Trade and Industry releases its advance economic growth estimates for the third quarter today.

'What we're seeing now is that Asia is at an inflection point. Growth is slowing down,' said Ms Ling, citing broad-based weakness in the manufacturing sector, weakness in electronics and lacklustre performances in the biomedical and pharmaceuticals segments.

In his speech yesterday, Mr Lee Yi Shyan, Minister of State for Trade and Industry, urged small businesses not to stop venturing abroad despite the economic slowdown.

'These challenging economic times also provide new opportunities for Singapore companies to venture overseas to seek opportunities in emerging markets such as Latin America, the Middle East, Russia and Vietnam,' Mr Lee said.

He added that there are still many areas where there are opportunities for collaboration, be it in agri-business, food and beverage, electronics, oil and gas, transport, logistics or infrastructure.

Yesterday's event - the first of a series of quarterly SBF seminars on economic outlook and business sentiment - attracted representatives from diverse industries including travel, retail, logistics and engineering.

Among those present was PASR Technologies' commercial director Max Collins, who said that the firm was more careful with expenses these days.

Previously, the firm would stock up on information technology equipment, but now it would just buy these gadgets to meet customer requirements.

'I've a concern that the market will just...contract, and people will stop spending,' he said solemnly.

Singapore Manufacturers' Federation president Renny Yeo said that most of his 2,600 members do not have problems borrowing from banks now.

However, he hopes that come next year, when they need to renew their terms with the banks, the funding will not dry up.

gabrielc@sph.com.sg