Singapore may be heading for technical recession
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By Ryan Huang | Posted: 08 August 2011 2130 hrs
SINGAPORE: Singapore has revised down its full-year economic growth forecast for this year amid renewed turbulence in the global financial markets.
It is now expecting growth to come in at between 5 and 6 percent instead of the original projection of 5-7 percent. This was revealed by Prime Minister Lee Hsien Loong in his National Day message on Monday.
And with the economic outlook looking more uncertain going forward, economists are not ruling out a technical recession for Singapore.
Asia, led by China and India, is expected to continue growing. But the global outlook remains uncertain.
"Europe's debt problems are far from solved, despite the recent bailout of Greece by the EU. The US economy remains sluggish. The US President and Congress have agreed to raise the debt ceiling, but have put off difficult decisions to raise taxes and cut spending. Japan has the added burden of earthquake and tsunami recovery," said Mr Lee.
"These three key economies are struggling to find the decisive leadership required to resolve their domestic challenges. This will weigh them down and dampen global prospects," he said.
That's one main reason the official forecast for Singapore's gross domestic product growth this year has been trimmed.
The revision was not a surprise, with the Monetary Authority of Singapore (MAS) alluding to it in its annual report released last month.
In fact, some private sector economists have already cut their own forecasts or are currently planning to revise their numbers.
CIMB were among the latest to downgrade its full-year forecast for Singapore economy to 4.7 percent, from its earlier projection of 6 percent.
DBS and UOB said they are currently revising their numbers downwards.
Weaker business sentiment is expected to be a drag on manufacturing activity, especially in electronics.
Mr Song Seng Wun, CIMB Research's regional economist, said: "For the full-year GDP, the slower production, the slower exports may translate to the headline GDP being bumped down slightly.....Another source of lower growth is obviously high inflation. We've got slower growth but inflation has been higher this year."
Mr Wu Kun Lung, Credit Suisse's economist, said: "We cut our 2011 and 2012 real GDP growth forecast for Singapore to 5.5% (from 6.5%) and 4.8% (from 5%), respectively, with downside risks if the European debt situation deteriorates further. We expect the 3-month Singapore SIBOR to stay unchanged at 0.44% till end-2012 (from 1% previously)."
Prime Minister Lee said the Singapore economy grew 4.9 percent in the first half. This suggests that the second-quarter GDP grew 0.5 percent year-on-year, in line with flash estimates.
Advance estimates released last month also showed the second-quarter GDP contracted 7.8 percent from the previous three months.
With growth expected to slow for the rest of the year there are now higher expectations of a technical recession, which is defined as two consecutive periods of quarter-on-quarter contraction.
But some said this could be good for Singapore.
UBS' chief investment strategist (Singapore) Kelvin Tay said: "We don't see a prolonged period of stagnant growth. In fact I think a slowdown in the third quarter might actually do the economy some good in the sense that we're a little bit too strong....in the first quarter of this year.
"If the economy slows down a little bit....it could be positive, because, don't forget, we are actually at full employment, with unemployment at an all-time low right now. So that will take some heat off the economy."
Singapore's unemployment rate in the first half remained at 2.1 percent.
Going forward, there are some bright spots for the Singapore economy. Commodity prices have been dropping recently and this could help exporters as well as rein in inflationary pressures.
Detailed second-quarter GDP data will be released on Wednesday.
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more or less expected.
http://sgforums.com/forums/3545/topics/435411?page=1#posts-10315830
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Originally posted by Clivebenss:
more or less expected.
http://sgforums.com/forums/3545/topics/435411?page=1#posts-10315830
It is like yoyo, goes up a little, and comes down a lot. Soon, it will touch the ground.
What we are witnessing is massive fiscal mismanagement by government, spending more and more each year with budget deficits. To fund government spending, tax the people, borrow or print money. You don't need an expert to tell you that all these options are not solutions. Yet, many governments in Europe and USA are run by people with superlative 'qualifications' and 'experience'. I tell you my grandmother can do better!
It is all about greed and power, mindless military campaigns that achieve nothing but deaths and destruction. Governments in Europe want to stay in power by popular policies of subsidies and freebies. Civil servants create work to justify more pay. Businessmen jack up prices to get more profits. CEOs increase their own salaries despite poor business performance. Bankers lent freely without regards to risks. When the banks go under water governments bail them out with taxpayers’ money.
So, you think all these problems require one to be an economic expert to solve? No, all it requires is for God to re-create Man!
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Originally posted by I No Stupid:
It is like yoyo, goes up a little, and comes down a lot. Soon, it will touch the ground.
What we are witnessing is massive fiscal mismanagement by government, spending more and more each year with budget deficits. To fund government spending, tax the people, borrow or print money. You don't need an expert to tell you that all these options are not solutions. Yet, many governments in Europe and USA are run by people with superlative 'qualifications' and 'experience'. I tell you my grandmother can do better!
It is all about greed and power, mindless military campaigns that achieve nothing but deaths and destruction. Governments in Europe want to stay in power by popular policies of subsidies and freebies. Civil servants create work to justify more pay. Businessmen jack up prices to get more profits. CEOs increase their own salaries despite poor business performance. Bankers lent freely without regards to risks. When the banks go under water governments bail them out with taxpayers’ money.
So, you think all these problems require one to be an economic expert to solve? No, all it requires is for God to re-create Man!
Can I get to know your grandma?
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Pity those who used up all their savings to purchase properties and cited low interest rates as a reason.
If they took up mortgages to purchase that highly inflated condominium, it's going to be a bane when recession strikes and job losses a reality.
Reality Bites.
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Originally posted by Clivebenss:
Can I get to know your grandma?
hahaha, you want to join her?
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Wow!!!
Yesterday Dow Jones Industrial Average dropped a whopping 5.55% and NASDAQ 6.9%!!!
That will really put a damper on property prices in Singapore!!!
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PAP cooling HDB flats prices fail but a financial crisis will do the trick. Financial crisis is better, in 2016 GE remember to vote Financial crisis in and vote PAP out.
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Originally posted by Protoman:
PAP cooling HDB flats prices fail but a financial crisis will do the trick.
Financial crisis is better, in 2016 GE remember to vote Financial crisis in and vote PAP out.
hahaha, u got a good sense of humour.
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may be is not a sure certainty it will happen.
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Maybe is not 100 percent. Like lao lee wrote in his book PAP will lose power one day does not mean it will happen. Singaporeans maybe until year 2100 AD PAP still in power.
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they will still be around as oppositions....
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it is going to be a long recession for the USA losing their AAA credit rating..as the market swept up along with debt ridden Europe.....esp. loans made to Spanish and Italian banks,...
China will demand US to address its debt issues...now the giant is tied to USA being its largest debt holder....
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The world may be a better place if we write USA off.
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Originally posted by I No Stupid:
hahaha, you want to join her?
may be she want to join me?
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Originally posted by Clivebenss:
may be she want to join me?
hmm .... not sure if she can join you
but sure that you can join her.
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What impact will be for the sporean if spore is going towards technical recession?
What is technical recession?
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Originally posted by I No Stupid:
hmm .... not sure if she can join you
but sure that you can join her.
nottie...
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technical recession
maybe inflation and housing prices will drop?
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Originally posted by lovegoodness:
technical recession
maybe inflation and housing prices will drop?
Negative growth in an economy means recession. Economic growth is measured periodically and compared with the preceding period. Technical recession is when growth is negative for 2 consecutive periods. Recession is part of economic cycle of positive growth, no growth and negative 'growth'. That's reality! This is Economics 101.
The question is how long will recession last? If it continues for several years, that is Depression. Next question is what is the government doing to get the economy out of recession?
And the most important question is: since recession WILL occur, what must we as individual and the government do to prepare and ride a recession when it occurs?