The change was announced by Prime Minister Lee Hsien Loong in his National Day message on Friday evening, when he also called on Singaporeans to prepare for a 'bumpy year ahead'.
He set out several reasons for this caution.
The US economic troubles are now starting to reach Asia.
Southeast Asia is also less prominent now for investors, who regard China and India as the big stories.
The growth revision did not surprise economists like CIMB-GK head of research Song Seng Wun.
'With only 4.5 per cent growth in the bag and a wobbly external environment, it is not a surprise to see the PM narrowing the GDP growth forecast for the year.'
In his address, PM Lee also said Singapore can act on three fronts:
Create wealth by developing the economy
Have more babies to secure Singapore's long-term future
Open up the Singapore system progressively as the Internet transforms societies and economies everywhere.
However, the sober mood is not without bright spots.
Singapore's economic results are good, given the external challenges, he said.
'Despite the uncertainties in our region, and in the world economy, Singapore is in a strong position,' added PM Lee.
