Singapore's gains look
fragile
By Robert M Cutler
MONTREAL - A raft of favorable economic statistics
was released in Singapore at the end of January, but the latest
data point to the possibility of a slowdown in manufacturing
activity.
Industrial production in December 2011 unexpectedly
grew 12.6% from a year earlier and 7.8% seasonally adjusted over
the previous month. This is a significant rebound after November's
year-on-year contraction of 9.6% and 25.2% month-on-month decline.
The growth in December was centered in the biomedical engineering
and transport sectors while electronics production continued to
fall.
On Monday, the government's latest Business
Expectations Survey found that nearly all sectors in the services
sector had a negative outlook for the period to June, with
retailers most pessimistic, followed by financial and insurance
companies.
The remarkable success of Singapore's two casino
resorts meant that the one bright area was the recreation,
community and personal services sector, which overall expected
their businesses to improve over the next five
months.
Singapore is expected to have surpassed Las Vegas as
the world’s second-largest gaming market last year, behind only
Macau, less than two years after the opening of the city-state's
Marina Bay Sands and Resorts World Sentosa resorts. Visitors from
China and further afield have flocked to enjoy the resorts' wide
range of dining, retail and other activities that are on offer over
and above gaming tables.
Singapore's exports grew 9% in December 2011 over
December 2010 (non-oil exports only), surprising the consensus to
the upside, with pharmaceuticals leading the rise (in addition to
high-ticket ship and boat structures), while electronics exports
fell 4.6% year-on-year. Export diversification to Asia, where
growth continues even if at a generally reduced rate, helped to
buck the trend of declining markets in the US and other developed
economies.
Estimates for fourth-quarter 2011 gross domestic
product (GDP) growth range from 3.5% to 4%, down from a 6.1% GDP
growth rate in July-September. The third quarter benefited from a
spike in biomedical engineering exports, just as the fourth quarter
benefited from a pharmaceuticals export spike. The latest published
government expectation for 2012 signals anemic GDP growth, in the
1-3% range.
Singapore's inflation rate, gauged from the consumer
price index (CPI), fell to 5.5% in December year-on-year from 5.7%
in November, in line with the consensus estimate. The CPI increase
for the whole year came in at 5.2%. Leading drivers of the
inflation rate are housing, food, and automotive costs. The central
bank’s "core inflation" measure includes food but excludes the
other two: it was up only 2.6% year-on-year. Unemployment in 2011
fell to a 14-year low as job creation remained strong. The
unemployment rate in 2011's fourth quarter was 2%, unchanged from
the previous three-month period.
As of early Wednesday morning local time, the
Straits Times Index was just below 2,900. It has spent the last
five months in the same 2,650-2,950 trading range, with the
exception of a few days in early October last year that saw it dip
down into the 2,500s. The 2,950 level also happens to mark almost
exactly the midpoint of the index's post-crisis recovery trading
range (based July 2009) with a post-crisis high in the high 3,100s
achieve in early February and early August last
year.
The Straits Times Index is thus in a situation
congruent to the MSCI Asia Pacific Index, which, now near 123, is
at the midpoint within the second of its three contiguous
post-crisis trading ranges. The present level of the Singapore
equity benchmark at 2,900 is also the level of a static short-term
resistance. Short-term technical indicators have been generally
favorable but have begun to fade so far this
week.
Above 2,900 there is still the medium-term
resistance at 2,950, which is in turn surmounted by long-term
resistances at 3,130 as well as several weaker resistances on the
way to get there. Thus, like the MSCI Asia Pacific Index, the
Straits Times Index will encounter its next significant technical
resistance at a level about 5% above where it now stands, if it
manages to get there.
Singapore’s overall economic performance for
December, as for the whole of 2011, must be considered relatively
good news by the ruling People's Action Party (PAP), which the
Singaporean electorate shocked last May by giving it only 60% of
the vote, its lowest percentage in its 45-year rule, despite which
the government 81 of the 87 parliamentary seats up for
election.
The election of Tony Tan Keng Yam to the mostly
ceremonial office of president of Singapore in August 2011, which
he won by a mere 0.34% (7,269 votes of out over 2.1 million cast),
may also be interpreted as a gentle rebuke to the ruling PAP, as
his campaign emphasized his differences over particular polices
from the PAP government.
The economic news for December may serve as a mild
distraction of public attention from the ongoing scandal that led,
over last month's Lunar New Year, to the dismissal of Peter Lim Sin
Peng as commissioner of the Singapore Civil Defense Force and Ng
Boon Gay as director of the Central Narcotics Bureau for "serious
personal misconduct".
According to a Jakarta Globe reprint of an article
attributed to Straits Times Indonesia, it is believed that a
married information technology executive, while in a previous job
with a Japanese multinational company, had sex with each of the
men, each unbeknownst to the other. She is reported now to be
assisting the Corrupt Practices Investigation Bureau in its
investigation of them, which began four to six months
ago.
Dr Robert M
Cutler (http://www.robertcutler.org), educated at the Massachusetts
Institute of Technology and The University of Michigan, has
researched and taught at universities in the United States, Canada,
France, Switzerland, and Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian Studies, Carleton
University, Canada, he also consults privately in a variety of
fields.
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