RECESSION looms for Singapore :
Economists
SINGAPORE, Oct 8, 2008 (AFP) - Singapore appears headed for its
first recession since 2002 as the city-state suffers from a US
economy wilting under its worst financial crisis since the Great
Depression, economists say.
Southeast Asia's wealthiest economy in terms of GDP per capita
is heavily dependent on trade, which makes it sensitive to hiccups
in developed economies, particularly key export markets the US and
Europe.
The crisis that began last year in the US subprime, or
higher-risk, mortgage sector is now infecting European shores, and
Singapore may very likely find itself in an extended downturn,
economists said.
They expect this Friday's release of preliminary economic data
for the third quarter to confirm Singapore is in a technical
recession, generally defined as two consecutive quarters of
quarter-on-quarter contractions in economic output.
"We are pencilling in the worst for Singapore.... We might see
two straight years of (economic) contractions (from 2009 to 2010),"
said Song Seng Wun, a regional economist with CIMB-GK Research.
While the last technical recession came six years ago, the most
recent full-scale recession was in 2001 when the economy contracted
2.4 percent during the year.
After years of growth, signs of a slowdown emerged with recent
disappointing trade data and contractions in the important
manufacturing sector, which includes the country's export-dependent
electronic and pharmaceutical industries.
In August, key non-oil domestic exports fell for the fourth
straight month, with electronic shipments continuing a decline
begun in February 2007, and manufacturing dropped by 12.2
percent.
The August fall in output followed a 21.5 percent decline the
previous month.
In the second quarter to June, Singapore's economy contracted
6.0 percent on an annualised, quarter-on-quarter basis and the
negative trend likely extended into the third quarter, said
economists.
"Things are bad globally," said Kit Wei Zheng, Citigroup's vice
president for regional economics and market analysis.
"There are a lot of downside risks and in such a scenario, one
cannot hope for a quick recovery," he said in Singapore.
Kit is optimistically forecasting a fourth-quarter recovery,
with full-year growth at 2.8 percent.
Song said his revised 2009 forecast would likely be for negative
growth.
He said that given the rarity of the global crisis, "the numbers
we may be looking at may be once in a century for Singapore."
According to economists' calculations, more than two-thirds of
the country's economy, valued at 243.17 billion Singapore dollars
in 2007 (166.46 billion US), is driven by external demand.
The island nation has no significant domestic economic drivers
to lean on because its market of almost five million is simply too
small, said economists.
"If the world is in a recession, there is little that we can
boost," said Song. "Our plan B is really to try to make the local
population bigger."
Economists from Credit Suisse also see Singapore's economy
slowing further next year.
"Signs that growth will be lower in 2009 than in 2008 are
everywhere... lower job and income growth, falling asset prices,
and flat to negative export growth," they said in a report.
"By sector, the global financial turmoil could hit financial
services growth hard, exports are likely to drag down
manufacturing, and the biomedical sector is expected to remain
under pressure from competition from generic drugs."
In early August Singapore's government cut its forecast for
economic growth this year to between four and five percent.
But Finance Minister Tharman Shanmugaratnam warned this week
that the country could be stuck in an economic downturn that may
last "several quarters" as the global crisis evolves.
"It is now an economic crisis," he was quoted as saying Monday
in The Straits Times.
"So globally the economy is slowing down. This is a fact that we
cannot escape."
‘Source : AFP, Wednesday, 8 October 2008’
It seems that MM LKY must have got his sights skewed in making a
10-Year positive outlook for Singapore, when events are
still whirling uncertainly around Singapore even before his
daringly speculative statements on 12 July 2008.
Now, what will this Better than World-Class Singapore
Government intend to do to pull Singaporeans out of this morass,
after allowing the increase in GST to 7 per cent on 1 July
2007 - before Singaporeans even got ourselves fully out
of the 2002 recession; and continuing with public transport
fares increased by 0.1%, pump prices increased by 15%, and
utilities costs to 21% - when our wage increases are kept
to single digit.
The Singapore Cabinet Ministers have claimed themselves to
be the best talent that Singapore can produce, and deserving
the wages that are even higher than the Presidents and Prime
Ministers of Super Powers - and yet they are hapless to steer clear
from all the negative external events that can affect
Singapore.
Our Cabinet Ministers have habitually claimed that
world events that negatively affect Singapore are beyond their
control; but will unabashedly make self-congratulatory claims
when the Singapore economy recovers due to the same
external factors - AND when these external factors are
largely influenced from positive actions taken
by Presidents and Prime Ministers who acted with wages that
are one-third paid to the Singapore Ministers.
Towards the end of 2007, researches have already shown the
relentless rise in the Cost of Living - based on a
Year-on-Year comparison to 2006.
Further researches in February 2008, had similarly shown the
Cost of Living conitnuing to rise, and by the end of the Q2 in
2008, the Consumer Price Index had risen a whopping 7.5 per
cent.
Amazingly, the August 2008 Consumer Price Index declined to make
any Year-on-Year comparison similar to the 2007 report.
Despite these unfavorable situation, this Government had the
gall to allow increases to our Transport Fares by 0.1% on 1 October
2008, Electricity charges has been allowed to be increased by
21% on 1 October 2008, and fixed phone lines will also see
increases by January 2009 for each call made.
‘Relentless rising Cost of Living in Singapore -
2007’
‘Overview - The Singapore Economy Second Quarter
2008’
‘Dept of Statistics : Consumer Price Index – August
2008’
