Singapore's Gross domestic Product (GDP), reeling under severe slowdown due to lower demand, shrank 6.8 per cent during the fourth quarter led by decline in the ailing manufacturing segment. However, the decline is less than what was earlier projected for the entire year.

Singapore's Trade Ministry informed that manufacturing segment, having significant contributing in the overall GDP of the city-state, contacted 34.4 per cent on seasonally adjusted basis during the reporting quarter compared to the 29.6 percent growth in the third quarter.

Pharmaceuticals and transport engineering performed less than expected while other manufacturing segments such as electronics, chemicals and precision engineering posted positive growth rate.

In the meantime, service and contraction segment grew by 7.2 and 4.3 per cent respectively. DBS said in its report, "Service sector has provided an encouraging evidence to support our prediction that the services sector will pick up the slack from manufacturing to become the key driver of growth in 2010."

Singapore economy, showing signs of recovery, is expected to grow between 3.0 and 5.0 percent this year as claimed by Prime Minister Lee Hsien Loong at his New Year message.