The economy, already in a technical recession, will see 'further slippage ... ahead' with the decline expected to spread to almost all sectors, from manufacturing to tourism.

The MAS in its second half-yearly macroeconomic review said that expansion is tipped to be 'below its potential rate' of 4 to 6 per cent next year.

The official growth forecast for this year has already been scaled down to about 3 per cent, while last week, Senior Minister Goh Chok Tong said that growth in 2009 could be below this year's projection.

Economists The Straits Times talked to predict practically no growth next year. Most predict expansion of between 0 to 1.5 per cent with a moderate recovery in the second half of next year.

Citigroup's Kit Wei Zheng, one of the more bearish economists with a tip that growth next year will be -1.2 per cent, said that 'a recovery in the second half of next year should not be taken for granted. Any recovery will be gradual and will not take the V-shape of past recessions'.

MAS said that ultimately a recovery will be 'predicated on the performance of the G3 - the United States, Europe and Japan - and regional economies'.

The ripples from the financial tsunami are reaching virtually all important sectors. The report said Singapore's economy has 'entered a more advanced stage of weakness'.

Manufacturing and tourism have yet to feel the full brunt of the crisis but will eventually be hit as firms and consumers cut back on spending, in not only the G3 economies, but across the region.

Electronics, which makes up 30 per cent of manufacturing, will continue its slide as firms scale down IT spending and defer outlays on tech upgrades.

The usually buoyant holiday season will offer scant relief for exporters as tech sales are likely to be lacklustre as consumers in major markets tighten their belts.

Read the full story in Wednesday's edition of The Straits Times.