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Economy
Recession fears
Despite a built-up cushion, global woes hit Singapore’s exports in a big way - with worse to come. Comment. Seah Chiang Nee
Jul 19, 2008Singapore is hitting a really bad patch and no one can say how bad - or how long - things will fall before the sun shines again.
Singapore’s selling point for decades, its strong economy – measured by GDP and reserves growth – is now looking a little fray as the global waves hit its our shores.
Bugged by high oil and food prices all around them, middle-class and poor Singaporeans are becoming more and more unhappy as their quality drops.
Last week there was is a brief respite to the oil crisis as prices fell from a high of $147 to $130 a barrel, but it’s too early to pronounce it is over.
Meanwhile, the value of its foreign investments has dropped by US$15-US$20b - so far, led by declines in US and European banks.
This is could be the worst performance in history for both Temasek and the Government Investment Corporation (GIC), despite assurances that they are long-term (30 years) investments.
At home, the government's actions against its political opponents and the way some were carried out in and outside the court have brought heat from some people at home and abroad.
Charges of ‘inept’ leadership and policies that worsen inflation are sounding out almost daily, loosening the bonds that existed between the governed and the governing.
Amidst all these, the centerpiece - the economy - on which the government uses to justify its crackdowns and controls, is beginning to show trouble as a result of the global woes.
(Leaders have often said that as long as the economy is strong, all other problems can be solved.)
In the latest report, Singapore’s non-oil domestic exports in June fell 10.5% to $12.8b, far worse than the 2.8% drop economists had been predicting.
It was due to sharp declines in shipments to key markets such as the United States, Europe and China. The rate of decline was the same as the previous month.
Seven of its 10 major markets registered drops in shipments, led by the 24% fall in exports to the USA, while exports to Europe declined 16% and were down 12% to China. That spells trouble ahead.
Economists are predicting more gloom in the immediate future - even a possible technical recession.
Song Seng Wun, regional economist at CIMB-GK Research said "We should be prepared for even more ugly export numbers in the coming months."
The city's gross domestic product (GDP) grew at a much slower annual pace of 1.9% percent in the second quarter from 6.9%.
According to the Straits Times, a senior executive from the Government of Singapore Investment Corporation (GIC) said that the global downturn will last longer than the tech bubble burst eight years ago.
Mr. Ng Kok Song told a gathering of top private bankers and senior fund managers that policy-makers here face more uncertainties, including inflation and the US presidential race.
Any recession, even a technical one, could affect jobs and business in Singapore. Citizens are worried about mass retrenchment, low salaries and low bonuses. Meanwhile, inflation continues at record high
didn't our emperor said that the next 5 to 10 years will be most promising for us?
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Look, what Tharman said about recession. He is not worth the obsecene millions salary people are paying him.
No signs of a recession, says Tharman <!-- TITLE : end--><!-- <br><font class="bodytext">SINGAPORE is not heading for a recession, said Finance Minister Tharman Shanmugaratnam, although fuel price increases in Malaysia would lead to discomfort.</font> -->
Goh Eng Yeow Mon, Jun 09, 2008
The Straits Times
<!-- Story Without Image /
With eXtra Large Image End --> <!-- CONTENT : start
-->SINGAPORE is not heading for a recession, said Finance
Minister Tharman Shanmugaratnam, although fuel price increases in
Malaysia would lead to discomfort.'From all indications we have at this point, I don't think we're heading for a recession.
'But there will be discomfort on the ground,' he said, speaking to Channel NewsAsia at the Entrepreneur-in-You Carnival at Republic Polytechnic.
At the event, about 7,000 people turned up to pick up tips on starting their own business.
'Unfortunately, the fuel price increase in Malaysia does mean that vegetable, poultry and some other prices will go up. We can't avoid that,' he said.
Malaysia's decision to trim subsidies for petrol and diesel and raise pump prices has meant that overnight, there has been a 41 per cent increase in petrol prices, from 80 Singapore cents to $1.13 per litre, while diesel prices rose 63 per cent, from 66 cents to $1.08 per litre.
Prices of a range of goods are set to go up as the cost of trucking them in rises, and fresh food tops the list.
But practically everything imported from Malaysia, including building materials, will also cost more soon.
He added that it was fortunate that rice prices globally were going down.
'But overall, we're in a situation which isn't temporary - this will be with us for a while.
'Commodity prices are much higher than what they used to be,' he said.
This was being tackled through government measures such as Growth Dividends, goods and services tax (GST) credits, as well community initiatives on the ground, he said.
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