Singapore recession, we are almost there

[Bloomberg]

By Shamim Adam

Sept. 26 (Bloomberg) -- Singapore will probably slip into a recession this quarter for the first time since 2002 as exports and manufacturing slumped and fewer tourists visited the city state, economists say.

Growth in the $161 billion economy faltered as exports dropped for four consecutive months, and industrial output declined in July and August. Gross domestic product contracted 6 percent in the second quarter from the preceding three months.

Asian policy makers are warning of a deepening slowdown in their economies as demand from the U.S., Europe and Japan weakens amid turmoil in global financial markets. Goldman Sachs Group Inc. last month estimated that half of the world economy faces recession, with richer nations faring the worst.

``The Singapore economy is facing headwinds on multiple fronts,'' said Alvin Liew, an economist at Standard Chartered Plc in Singapore. ``Manufacturing is down, the government thinks tourism will fall short of targets and the unraveling of the global financial crisis will slow banking activity here.''

The island nation of 4.8 million people would join others in posting a technical recession, defined as two straight quarters of negative growth. New Zealand's economy contracted in the three months to June, driving the nation into its first recession in 10 years.

Japan's economy shrank 3 percent last quarter, the steepest drop since 2001, while the euro-area contracted 0.2 percent in the same period. Australia's expansion last quarter was the weakest in more than three years as consumers cut spending, and Taiwan's central bank Governor Perng Fai-nan yesterday warned of higher ``downside'' growth risks.

Estimates Cut

Singapore's government last month lowered its estimate for 2008 growth to between 4 percent and 5 percent from an earlier forecast of as much as 6 percent. The economy may grow less than 4 percent this year, the Straits Times reported this week, citing Trade and Industry Minister Lim Hng Kiang.

The possibility of a recession in Singapore can't be ruled out amid the worst financial turmoil in global markets since the 1930s, Finance Minister Tharman Shanmugaratnam said on Sept. 21, according to a report by the Today newspaper.

Central banks around the world have pumped over $300 billion into their financial systems to provide liquidity and revive confidence among banks as credit markets seized up. The credit crunch triggered by a housing slump in the U.S. led Lehman Brothers Holdings Inc. to file for bankruptcy and forced the sale of Merrill Lynch & Co. to Bank of America Corp.

Risks Intensify

``The financial crisis has likely intensified the downside risks to external demand and the property market,'' said Kit Wei Zheng, an economist at Citigroup Inc. in Singapore. ``A likely tightening of financial conditions will impose its own drag on the domestic economy, independently of the external slowdown.''

The Singapore government last month warned that its manufacturing industry, which makes up a quarter of its economy, will remain weak amid easing demand for pharmaceuticals, chemicals and electronics from its biggest markets. Industrial production dropped 12.2 percent last month after a 21.5 percent decline in July, the Economic Development Board said today.

The country's services industry, which accounts for about two-thirds of the economy, is also showing signs of weakening. Visitor arrivals dropped 7.7 percent in August from a year earlier, the biggest tumble since the outbreak of a respiratory virus in Asia froze travel in 2003.

Meeting a 2008 target for 10.8 million tourists will be ``more challenging,'' Senior Minister of State S. Iswaran said last week.

Modest Loosening

An economic slowdown may prompt the Monetary Authority of Singapore to allow slower gains in the currency when it reviews its policy stance next month, said Mark Tan, an economist at Goldman Sachs in Hong Kong.

``There is a good chance of Singapore slipping into a technical recession in the third quarter,'' Tan said. ``The weakening growth outlook will probably prompt the MAS to loosen policy modestly from their current stance in October.''

The central bank in April allowed faster gains in the currency to damp inflation that accelerated to the fastest pace in 26 years. Easing inflation and growth has increased the likelihood that the central bank ``might reverse its tight monetary policy,'' economists at United Overseas Bank Ltd. wrote in a report today.

[EffOne]

How can it happen? Don't we have the Wheel and the Formula One and the upcoming IRs? How can Singapore get into recession?

[flyer]

.. and what about reversing the direction of the Flyer.  Wasn't that supposed to change the fortunes of the CBD.  Since then we've had AIA and BEA crises, not to mention job losses at various US banks.  Could the Feng Shui master have been mistaken?

[comingandgoing]

Singapore has 4.8m people now. I thought it was 4.2m people. Where did 600,000 come from ?
Construction workers ?

It might drop to 4.4m when the recession hits

[all roads]

point to an impending deceleration in housing prices. SIBOR is the precursor. TOP is coming. DPS players will have a change of heart. HNWs see their wealth being diminished by the ongoing financial crisis. Investment houses that were snapping real estate projects in East Asia are a thing of the past. The easy credit and liquidity that spurred the stock mkt boom and the property boom and then the commodity boom is now being unwound. This liquidity has it's beginnings in 2002 and it's end in 2008. 2007 and early 2008 was abt the peak. Sg property prices will slide downwards..

[Kubes.SG]

This article was in the Weekend Business Times.  As I started reading it I thought this would be the first hint from the Govt that recession was here, or imminent. Not so.  The article just focuses on sector-after-sector of truly disastrous numbers that comprehensively show Singapore's export economy is imploding as we watch, but you have to get to the very last word in the article to see the "r-word" stated.  And that was in a quote from a banker.

Really disappointed in the complete denial.   Do they think people are stupid.


Singapore output down 12.2 percent in August: govt

SINGAPORE, Sept 26, 2008 (AFP) - Singapore's manufacturing output fell 12.2 percent in August, more than economists expected, with the volatile pharmaceutical sector weighing heavily, official figures showed Friday.

Analysts polled by Dow Jones Newswires had forecast a median 8.7 percent contraction for the month, compared with the same period a year earlier.

The preliminary figures for August followed a decline of 21.5 percent in July and a 3.0 percent gain in June, data from the Economic Development Board (EDB) showed.

The biomedical manufacturing cluster showed the biggest decline in August. It was down 33.8 percent overall, led by pharmaceutical output which dropped 35.7 percent compared with the same month last year, the EDB said. It blamed the fall on a different mix of ingredients that was produced last month.

Medical technology production fell 6.8 percent, it added.

All segments of the electronics sector showed modest growth except for information-communications and consumer electronics products, which slumped by 60.8 percent, the EDB said. It cited "continued relocation of mobile device production" for that decline.

Overall, electronics output in August fell 7.1 percent.

In the chemicals cluster, output was down by 6.0 percent last month.

"There were maintenance shutdowns in the petroleum and petrochemicals segments, resulting in a drop in output of 3.2 percent and 15.2 percent respectively," the EDB said.

Transport engineering held steady, up 0.1 percent in August. The EDB said growth was largely confined to the aerospace segment which was up 13.9 percent because of more engine and commercial repairs from the region.

The marine and offshore engineering segment, which includes oil rig production and ship repair, was off 8.6 percent last month, the EDB said.

Cumulative manufacturing output for the first eight months of this year shrank 2.0 percent compared with the same period last year, it said.

On a seasonally adjusted month-on-month basis, output dropped by 1.9 percent in August from July.

Singapore's open, trade-driven economy has been hurt by slowing global demand, and DBS Group Research said the latest output data "should provide a clue as to whether Singapore will enter into a technical recession."

[cmdsea]

Hmmm... Whats a "technical recession" as opposed to any other kind of recession.?

[definition]

a recession:  An extended decline in general business activity,

technical recession:  two consecutive quarters of falling real gross national product.

[cmdsea]

Ok. Think I have got it. So when we enter the 3rd quarter its no longer "technical" but becomes "real".!

[definition]

It was real all along, but by the third quarter there is proof!

[To Kubes]

I understand your frustration about not using the R word. But put yourself in their shoes. Do you really want to go about town saying "we are in a recession" during the Formula 1 weekend? What will those tourists think when they see the headlines over their foie gras breakfast?

Why let the truth intrude into a week where Singapore is showing off it's best?

[Kubes.SG]

I understand your frustration about not using the R word. But put yourself in their shoes. Do you really want to go about town saying "we are in a recession" during the Formula 1 weekend? What will those tourists think when they see the headlines over their foie gras breakfast?

Why let the truth intrude into a week where Singapore is showing off it's best?

HA HA Absolutely.  Looks like there really are things that you can learn and reapply from China.

And they could argue it it not official anyway until we get to end of the 3rd quarter, a few days away.

[kaki11]

The SG economy has shrunk slightly in real terms since Q3 2007; seasonal adjustments and base effects however, enable the headline figures to show growth. Coupled with the C. 5% growth in the population and the 10.1% rise in workforce (Jun07-Jun08), GDP per capita and productivity have slipped sharply. Unless the pharma sector has been popping pills in September, the GDP numbers will look bad.
The population figures may support the property bull case however this could be offset by a)companies may well retrench, b) banks being more cautious on lending to property/construction sectors where they are heavily exposed and c)the UK's has "enjoyed" an explosion in immigration but that has not stopped the savage decline in the prices and transaction volumes of residential (and commercial) properties.

[AIYAH]

aiyah things go up and go down, its cyclical. what with all the super rocket scientists crooked brain materials around, this temporary phenomenon will blow over just like the typhoons and hurricanes, and these crooks will come up with ways to again make super duper big bucks. for us common folks, those who got money, whatever cheap affordable stuff comes your way, grab lah. those who got no money, just move to the sidelines and wait it out. no worries lah, only a few very super rich will cry with their big losses, the rest us folks with simple taste will be able to ride out this storm(dont feel it yet).

[leverage]

The SG economy has shrunk slightly in real terms since Q3 2007; seasonal adjustments and base effects however, enable the headline figures to show growth. Coupled with the C. 5% growth in the population and the 10.1% rise in workforce (Jun07-Jun08), GDP per capita and productivity have slipped sharply. Unless the pharma sector has been popping pills in September, the GDP numbers will look bad.
The population figures may support the property bull case however this could be offset by a)companies may well retrench, b) banks being more cautious on lending to property/construction sectors where they are heavily exposed and c)the UK's has "enjoyed" an explosion in immigration but that has not stopped the savage decline in the prices and transaction volumes of residential (and commercial) properties.

agree with the per capita. with such rapid population growth, and widening income gap, a very small elite group is getting richer at the expense of the underclass and the immigrants, who are little more than modern day slaves. few things have changed since the Roman days.