Singapore PM says economy may shrink 8 pct in 2009 -CNBC

SINGAPORE Feb 28 (Reuters) - Singapore's trade-dependent economy could shrink by 8 percent this year, much worse than the government's forecast of a contraction of 2-5 percent, Prime Minister Lee Hsien Loong said on CNBC.

"Can it be worse than minus 5? Yes it is possible, because it depends on the global situation," Lee according to transcripts from an interview with the business news channel on Friday.

He said a one-third fall in exports would translate into a contraction in gross domestic product -- the value of all goods and services produced -- of 8 percent, unless the city-state is able to boost growth in other industries such as construction.

Singapore exports most of its manufactured goods, and manufacturing accounts for about one quarter of the economy.

The economy contracted by 16.4 percent in the fourth quarter of 2008 at an annualised, seasonally adjusted pace, hurt by a sharp drop in the production and export of electronics and drugs. It grew just 1.1 percent in the whole of 2008 compared to 7.8 percent in 2007.

Lee also told CNBC it was possible that Singapore's unemployment -- a seasonally adjusted 2.6 percent at the end of 2008 -- could rise to 5 percent this year as forecast by several private sector economists.

Singapore is one of the world's most-trade dependent nations and a barometer for the health of Asia's exporter, with the value of imports and exports totalling more than three times grOss domestic product. (Reporting by Kevin Lim; Editing by Jan Dahinten)