The economy in recession-hit Singapore is set to contract 0.6% this year, an influential central bank survey of gurus has revealed.

Efforts by the government to bolster demand will prove insufficient to save the economy from ending 2001 smaller than at the beginning of the year, economists surveyed by the Monetary Authority of Singapore concluded.

"They do not expect the off-budget package introduced recently to provide much support for domestic economic activity," said MAS, Singapore's central bank.

The government has introduced a $2.2bn rescue package, including extended tax rebates and accelerated spending on infrastructure projects, in an effort to bolster the economy.

Economic gloom

The survey's results will deepen the gloom hanging over Singapore, which in July revealed it had become one of the first country's to enter recession amid the global economic slowdown.

While Singapore economy shrank 0.6% in the April-to-June quarter, compared with the same period in 2000, the government is still forecasting growth of 0.5-1.5% this year.

The economists surveyed by MAS also predicted a slump in exports, with forecasts ranging from minus 11-15%.

But most of the gurus surveyed saw trade reviving next year, in line with a recovery in technology markets.

The economists saw the economy expanding by 4.8% next year, compared with a government forecast of 9.9% growth.

Free trade talks

The survey comes as Singapore and Japan have resumed discussions aimed at sealing a free trade agreement by the end of the year.

The discussion are believed to involve the elimination of tariffs on almost all goods, with the notable exception of agricutural products.

Japanese farmers enjoy heavy trade protection.

Singapore has already sealed a free trade deal with New Zealand, and is exploring similar agreements with the US, Australia and Mexico.