Deepest recession ever for SG

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Jan 19, 2009

S'pore in sharp recession

Recovery not expected until second half of year


SINGAPORE'S economy won't recover from the current 'sharp' recession until the second half of 2009, Trade and Industry Minister Lim Hng Kiang said in Parliament on Monday.

The Republic is facing unprecedented factors in this recession and little can be done to mitigate the downturn, he said.

Its key non-oil exports fell 7.9 per cent in 2008 from a year earlier, hurt by a sharp decline in external demand amid a global economic downturn.

'There is very little we can do to try and mitigate the impact of such a major decline in external demand,' said Mr Lim, during question time.

'The economic downturn has spread to all sectors of our economy.'

Mr Lim also warned that job losses will increase and consumer sentiment will weaken as the manufacturing and financial industries slow, but he declined to give a forecast.

Singapore's loans may decline in the coming months as banks turn more cautious in lending amid a deepening economic slump, he added.

Still, Singapore's banks are not facing a liquidity crunch and the financial system remains 'fundamentally sound,' he said.

Finance Minister Tharman Shanmugaratnam is due to present the budget for the 2009/10 fiscal year to parliament on Thursday, expected to be expansionary to help combat the slowdown.

Singapore government may dip into reserves

Channel NewsAsia
- Monday, January 19 SINGAPORE:

As Singaporeans brace themselves for a difficult year, a strong response to the global recession will be needed in the upcoming Budget.

This could involve dipping into the carefully—guarded reserves of the country, according to Senior Minister Goh Chok Tong.
"It’s a difficult decision, because once you do that you may open the reserves for future demands which may not justify the use of the reserves. So, it’s an issue that the Prime Minister is thinking over very carefully," he said.

But Mr Goh stressed that such a move is intended for exceptional times.
"And we’ve always said, the reserves are for a rainy day. So if this is not a rainy day, I don’t know what is a rainy day. But nevertheless it has to be justified to the President. So, that’s an issue which Finance Minister and the Prime Minister would have to deliberate quite carefully," said Mr Goh.

When asked what this sum could amount to, Mr Goh’s reply was that it depends on the measures that would justify the use of the reserves.
Citing Singapore’s latest trade figures which declined sharply, he said that top on the government’s priority is to help businesses cut cost.
Mr Goh also noticed that 30 per cent of the cranes at PSA are sitting idle, with shipping freight figures close to zero.

"We must have a muscular response in the Budget. The key issue for us is how to save jobs. Of course, to have economic growth, you’ve got to stimulate demand. But this time it’s a global recession, and it’s beyond us. We can do what we can in Singapore, but it’s not going to solve our economic growth problem," said the senior minister.

Mr Goh was speaking to reporters after distributing hongbaos and gifts to about 40 needy residents at his Marine Parade constituency, an annual tradition for him.

This year, the increased cash assistance of S$100 in each hongbao could not have come at a better time for some families, as Singapore’s economic growth this year — which is forecast to be between minus 2 and plus 1 per cent — will be revised ahead of Thursday’s Budget.
On the issue of the investigations into the failed financial products such as those linked to Lehman Brothers, Mr Goh said there are lessons learnt from the episode and more measures will be put in place.
He refused to elaborate, saying: "I would not want to go into this, because there’s a question (to be) asked in Parliament (which sits on Monday)... MP will ask the question, so I let the question be answered in Parliament."

— 938LIVE/CNA/

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January 21, 2009, 8.24 am (Singapore time)

S'pore in worst-ever recession after Q4 slump


SINGAPORE - Singapore's economy shrank more than expected in the fourth quarter, prompting the government to declare the nation was in its worst ever recession and fanning expectations that the central bank will let its currency weaken.

The Singapore economy shrank in the fourth quarter at a seasonally adjusted, annualised pace of 16.9 per cent, deeper than advance estimates of a 12.5 per cent contraction, detailed government data showed on Wednesday.

The government said it now expected Singapore's economy to contract between two and five per cent this year, slashing its forecast further from an already downgraded outlook of a range of minus 2 per cent to plus 1 per cent published just three weeks ago.

'The Singapore economy is going through its sharpest, deepest and most protracted recession,' the Ministry of Trade and Industry's second permanent secretary Ravi Menon said at a media briefing.

Singapore's central bank said on Wednesday that its monetary policy stance of zero appreciation in the Singapore dollar announced last October was intact and it had no plans to review monetary policy ahead of a scheduled policy meeting in April.

But analysts said the gloomy economic forecasts and grim fourth quarter data increased the likelihood the central bank will loosen policy and let the Singapore dollar slide.

'I'm bearish for the Singapore dollar. It's worse than I expected,' said Irene Cheung, currency strategist at Royal Bank of Scotland in Singapore.

'I expect monetary policy to remain accommodative - they should have recentred the band earlier, but they might still do it - the sooner the better.'

Singapore manages monetary policy by adjusting the value of its currency relative to those of its main trading partners in an undisclosed band. The Singapore dollar stood at 1.5037 against the US dollar by 0050 GMT, compared with 1.51 before the data.

The government expects key non-oil domestic exports will shrink 9-11 per cent this year, while total trade, which includes entreport activities, may plunge 17-19 per cent.

From a year ago, fourth quarter gross domestic product, or the value of all goods and services produced in Singapore, fell 3.7 per cent following a drop of 0.2 per cent in the third quarter.

Singapore last reported three straight quarters of economic contraction in 2001 after the dotcom bubble burst in the United States, badly hurting the city-state's key electronics sector.

The economy grew 1.2 per cent for all of 2008, slowing sharply from 7.7 per cent expansion in 2007.

The government said manufacturing output in the fourth quarter shrank 10.7 per cent from a year earlier, while services contracted 0.1 per cent. -- REUTERS