Singapore’s economic czars declaration the island nation is “technically” in recession since 2002 has hit Singapore’s attraction as a tourism and shopping heaven in the Far East.

Singaporean Prime Minister Lee Hsien Loong in a warning to his countrymen on the looming financial turmoil in May said: “The Singapore economy will be more severely affected by the global financial turmoil. Dark storm clouds have gathered.”

As tourists stay home or travel to holiday destinations nearer home, or nearby countries due to lower spending power, Singapore’s hotels and tourism-related industriesare “likely to suffer,” according to economic analysts.

Slowing visitor arrivals, which show a drop of 7 percent since June, may now halt Singapore tourism’s projection of 10.8 million visitor arrivals this year.

Singapore’s award-winning Changi Airport has reported handling 2.8 million in September, down 0.4 percent from last year. “The first decrease in monthly traffic since February 2004”, said a Changi Airport spokesperson.

Numbers are also down for the Singapore national carrier, Singapore Airlines, which said it carried 1.6 percent fewer passengers, compared to a year ago.

Critics are now beginning to question if the US$28 million spent by the Singapore Tourism Board (STB) in April 2008 to transform its iconic main shopping and entertainment strip, Orchard Road, to compete with London’s Oxford Street has been money well spent.

Some outlets, which have embraced the “makeover” plans despite having to shut its doors for renovation work have not been discouraged by the economic slowdown. “I am not necessarily concerned about the economic downturn,” said restaurant general manager John Ford. “It will impact business a little bit, but people need to go out. People want to go out.”

“All the regular customers have come back,” added Oh Ichikawa, managing director of Tamaya Japanese restaurant, which shut its doors for four months.

Orchard Road’s makeover, scheduled for completion in February 2009, includes building Green Room “rest areas” and retiling walkways from Tanglin to Ngee Ann Street.

According to STB director Andrew Phua, the tourist board has always planned “many years ahead.” He said, “Many are jumping on the bandwagon.”