Singapore faces devastating exodus of
foreigners
Wednesday, 21 January 2009
Leo
Lewis
Times online
Singapore faces an exodus of 200,000 foreigners as the financial
services and manufacturing industries scythe through their
workforces and the city-state grinds towards the worst recession in
its 43-year history.
The expected exodus, predict analysts at Credit Suisse, could see
the number of people living in the tiny but economically powerful
island shrink
more than 3 per cent to just 4.68 million by 2010 in a shift that
would severely undermine the government’s 22-year efforts to boost
the population through immigration.
A broad rule of thumb, said analysts at UBS in Singapore, is that
nearly every new job created over the last few years went to a
foreigner. The economic policies of the city state have overtly
relied on its ability to attract talent and skills from
abroad.
The departure of thousands of ex-pat bankers, lawyers and
accountants between now and 2010 is expected to lead a secondary
exodus of manufacturing, construction and service sector foreign
workers.
Job losses will hit Singapore hard, said Credit Suisse economist
Cem Karacadag, “because they affect more highly paid workers and
could result in a semi-permanent drip in the population”. He added
that the potential drop “would have far-reaching implications for
the economy” including a possible sharp contraction in private
consumption.
The knock-on effects of a Singapore exodus, some real estate
analysts believe, could also see property prices fall by as much as
30 per cent from their current levels.
Credit Suisse’s grim population forecast comes amid warnings that
among non-Japan Asian countries, Singapore’s open economy may be
hit hardest by the global downturn. Consumption growth, said the
report, could fall to almost zero.
Analysts at believe that the country’s GDP may contract by 2.8 per
cent in 2009 as rising unemployment hammers domestic growth and the
collapse of consumer confidence around the world hits
exports.
Mr Karacadag raised a further red flag for Singapore’s economy by
warning that there was a risk that forecasts were still
underestimating the effects of a broad Asian downturn and further
terrible news from the financial sector.
Singapore – the world’s busiest port by tonnage handled and the
home of some of the world’s largest shipping companies - is already
feeling the pain of an alarming slump in global trade.
With the credit crunch still affecting trade finance and the demand
for Asian manufactured goods in acute decline, hundreds of
container and dry-bulk ships now sit unneeded and at anchor outside
Singapore. The stagnation, say brokers, is matched onshore.
In tandem with the warnings over a possible population crunch,
concerns are growing among investors over the health of Singapore’s
domestic banks. The “benign asset quality” environment in which
Singapore banks have thrived, say analysts, has now reached an
inflection point.
The ratio of non- performing loans is expected to rise sharply as
the construction boom that has filled the Singapore skyline with
towers and cranes begins to deflate.
Between 2003 and 2008, the population of the city state soared
nearly 18 per cent in an increase driven predominantly by
foreigners hired to meet Singapore’s endemic shortage of workers
during the good times.
When global trade, investment banking and Asian stock markets were
booming, Singapore successfully fashioned itself as a financial hub
to rival Tokyo and Hong Kong and the expatriates flooded in –
around 200,000 jobs were created in the financial and business
services sector over the last four years.
A large number of jobs are expected to be lost in manufacturing,
which accounts for about a quarter of Singapore’s GDP.
http://www.yoursdp.org/index