Singapore, Jan 4 - Economic activity in Singapore slowed in the fourth quarter, with gross domestic product contracting by 6.8 percent, the government said Monday.

The drop in the fourth quarter resulted in a 2.1-percent contraction for the year. The negative economic growth for 2009 fell within the Trade and Industry Ministry's forecast of a of 2 percent and 2.5 percent drop for the year.

The manufacturing sector of the export-oriented city state was weak during the fourth quarter, contracting by 38.4 percent on a seasonally adjusted quarter-on-quarter annualised basis, a reversal from the 29.6 percent expansion in the third quarter, the ministry said.

The services sector also continued to grow at a more moderate pace. On a seasonally adjusted quarter-on-quarter annualised basis, the sector's growth eased to 7.2 percent in the fourth quarter, down from 10.9 percent in the third quarter. This was mainly due to a slowdown in wholesale and retail trade from its strong growth in the

third quarter, the ministry said.

Most of the other segments of the services sector continued to grow. Financial services saw increased commercial bank, foreign exchange trading and Asian Currency Unit business, said the ministry, adding that the preliminary GDP estimates would be released in February. (dpa)