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Thread: S'pore slips into recession

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    Default S'pore slips into recession

    http://www.straitstimes.com/Breaking...ry_288066.html

    Oct 10, 2008

    S'pore slips into recession

    # MTI lowers 2008 forecast to 3%, from earlier 4-5%
    # MAS moves to ease monetary policy
    # Inflation has peaked



    SINGAPORE has slipped into its first recession since 2002 after its economy declined for a second straight quarter, prompting the central bank to ease monetary policy favoring gains in its currency in an effort to confront the downturn.

    The Ministry of Trade and Industry (MTI) on Friday also revised downwards Singapore's full-year growth forecast to around 3 per cent from an earlier estimate of 4 to 5 per cent, citing a slowdown in the global economy and key domestic sectors.

    At the same time, the Monetary Authority of Singapore said it was easing monetary policy for the first time in more than four years. It said on Friday it is shifting to a 'zero-percent appreciation' stance and will intervene to reduce "excessive volatility'.

    There will be no re-centering of the band of change in the so-called width, the range in which it is allowed to trade, said MAS.

    Central banks around the world are loosening monetary policy and cutting interest rates as an escalating global credit crisis that's toppled banks in the US and Europe saps growth.

    MTI said the impact of the worsening US financial crisis and the deepening credit crunch had weakened US consumer sentiment, which will affect demand from Asia and the rest of the world.

    On a seasonally adjusted quarter-on-quarter annualised basis, real GDP declined by 6.3 per cent in the third quarter after contracting 5.7 per cent in the previous quarter, the ministry said.

    While it did not describe the economy as being in recession, a technical recession is generally defined as two consecutive quarters of contraction in economic output.

    Economists polled by Dow Jones Newswires had forecast a 0.3 per cent quarter-on-quarter rise in gross domestic product, the value of goods and services produced in the economy.

    Singapore's last technical recession occurred in 2002 while the most recent full-scale recession was in 2001, when the economy contracted 2.4 per cent during the year.

    Compared with the third quarter of last year, the ministry said Singapore's economy contracted by 0.5 per cent in real terms, against 0.8 per cent expansion foreseen in the Dow Jones poll.

    In August the government had revised down its full-year GDP forecast to 4.0-5.0 per cent but since then, external economic conditions have deteriorated more than expected and some sectors of the economy have weakened significantly because of industry-specific or domestic factors, the ministry said.

    'Singapore's export-oriented sectors, such as manufacturing, will be affected,' it added.

    Last year the economy expanded 7.7 per cent but after years of growth, signs of a slowdown emerged with recent disappointing trade data and contractions in the important manufacturing sector, which includes the export-dependent electronic and pharmaceutical industries.

    In August, key non-oil domestic exports fell for the fourth straight month, with electronic shipments continuing a decline begun in February 2007, while manufacturing dropped by 12.2 per cent.

    The August fall in output followed a 21.5 per cent decline the previous month.

    The government's preliminary third-quarter GDP estimates are based largely on data from July and August, and are subject to revision.

    Inflation peaks
    Inflation, which reached a 26-year high earlier this year, has peaked, said MAS. Consumer prices will rise between 6 per cent and 7 per cent this year, and gains will ease to between 2.5 per cent and 3.5 per cent in 2009, it predicted.

    'Against the backdrop of a weakening external economic environment and continuing stresses in global financial markets, the growth of the Singapore economy is expected to remain below potential in the period ahead,' said MAS.

    'Inflation is expected to trend down in 2009 as the global and domestic economies slow.'

    Exports slump
    Singapore's US$161 billion (S$239 billion) economy declined 0.5 per cent last quarter from a year earlier, compared with a revised 2.3 per cent gain between April and June.

    Growth has deteriorated as a slump in export demand forced factories to cut production, tourist arrivals faltered and a real-estate boom ended, reported Bloomberg news.

    The island's manufacturing industry, which accounts for a quarter of the economy, contracted 11.5 per cent last quarter from a year earlier, compared with a revised 4.9 per cent drop in the previous three months, according to today's report.

    Singapore's government expects exports to decline as much as 4 per cent this year, and the island's shipments of electronics goods have fallen for 19 consecutive months.

    Financial services
    Services climbed 6.1 per cent in the third quarter from a year earlier, slowing from a 7 per cent pace in the previous three months. The city-state will probably miss a government target of 10.8 million visitors in 2008, the tourism board said on Sept 23, after visitor arrivals dropped 7.7 per cent in August.

    'The financial services sector is likely to see slower growth in the coming months as the ongoing global financial crisis has heightened uncertainties for sentiment-sensitive segments such as stocks trading and fund management activities,' said MIT.

    The construction industry grew 7.8 per cent, easing from a revised rate of 19.8 per cent in the previous quarter.

    Singapore's benchmark Straits Times Index slumped 7.3 per cent to its lowest level since November 2004 on Friday in opening trade after the economic data and policy statement.

    The Singapore dollar rose to $1.4724 per US dollar after the central bank's announcement compared with $1.4780 as traders adjusted positions after the widely expected move. -- AFP, REUTERS

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    Default Economy slips into technical recession

    http://www.straitstimes.com/Prime%2B...ry_288282.html

    Oct 11, 2008

    SINGAPORE

    Economy slips into technical recession

    By Fiona Chan


    SINGAPORE is in a technical recession after the economy slipped into negative territory for the second quarter in a row, dragged down by a slump in exports and a weak property market.

    But the real recession, which usually portends job losses, will probably come next year when the Republic feels the full impact of the global economic slowdown, warned economists.

    Many have lowered their growth forecasts and are now tipping 0 to 3 per cent growth next year.

    The economy shrank in the third quarter, declining by a worse-than-expected 0.5 per cent from a year ago, according to estimates released yesterday by the Ministry of Trade and Industry (MTI). Compared with the previous quarter, the economy declined 6.3 per cent, on top of a 5.7 per cent contraction in the second quarter, the ministry said.

    Aside from growth in the first quarter, the economy contracted quarter-on-quarter in three of the last four quarters. This is the first technical recession since 2002, after the dot.com bust. Lowering the official forecast for full-year growth for the third time this year, the ministry now expects the economy to grow at 'around 3 per cent' this year, down from 4 to 5 per cent. The original prediction was 4.5 to 6.5 per cent growth.

    'External economic conditions have deteriorated more than expected and some sectors of the economy have weakened significantly,' it said.

    With the deepening global financial crisis, demand for exports has dropped, hitting Singapore's key manufacturing sector, which shrank by 11.5 per cent in the third quarter amid a protracted slump in pharmaceuticals and electronic output.

    Construction and services held nastier surprises. Construction, which had been powering along at double-digit growth, abruptly halved to lodge single-digit expansion for the first time since 2006.

    MTI said that despite 'a strong pipeline of construction projects', a shortage of contractors, engineers and project managers had caused building delays.

    Economists also pointed to the lacklustre property market, where a standstill in home sales has prompted developers to delay launching and building projects. With no relief in sight, construction growth is likely to stay at this slower pace.

    But a boost could come from the Government bringing back $2 billion worth of building projects it had put off earlier this year to ease the construction squeeze, suggested OCBC economist Selena Ling.

    The services sector held no bright spots either, cooling to lower growth as financial market activities slowed while the subdued property market weighed down on the real estate services industry.

    'This suggests that the global slowdown has had a much greater knock-on effect on services than we had anticipated and marks the start of a more protracted decline in services growth,' said DBS economist Irvin Seah.

    The key worry in this, he said, is that services employs the bulk of the labour force and lower growth may lead to job losses.

    But Ms Ling noted that the unemployment rate remains at very low levels, so retrenchments may not hurt so much. She said: 'If job losses come mainly from manufacturing, most of the people hit will be foreign workers.'

    To address growth concerns, the Monetary Authority of Singapore has eased monetary policy, setting a zero appreciation stance for the Singapore dollar.

    But economists said more immediate measures may be needed in the form of fiscal stimuli, focusing on lower-income groups and retrenched workers.

    [email protected]


    What's a technical recession?

    A TECHNICAL recession is defined as two consecutive quarters in which the economy has shrunk compared to the previous quarter.

    The size of the economy is measured in terms of the total value of goods and services produced in a country, also known as its gross domestic product, or GDP.

    Generally, the duration of a recession is the full period of the business cycle that economic activity is in decline.

    There is no universally accepted way to measure a 'real' recession. Some suggest a full-year economic contraction or two consecutive quarters of the economy shrinking compared to the same period in the previous year.

    Singapore's last 'full-scale' recession was in 2001, when the economy shrank 2.4 per cent during the year after the bursting of the dot.com bubble.


    VOICES

    'At this point, the impact on companies is not significant yet...Big and small companies are going to face the same situation going forward: It's a liquidity problem that's not resolved yet. It started with sub-prime. Now we have gone into corporate loans.

    'Companies should get prudent on cost control and manage cash carefully. They have to be very careful before making major investments. On the Government side, we have to think of how (to ensure that) liquidity does not dry up. Viable businesses may not be able to get bank loans.

    'The job situation remains OK. Let's say the integrated resorts take off. Singaporeans must be prepared (to switch jobs). There's also a chance the IRs won't take off, because people lost their wealth. We may go into an unemployment situation. I want to be realistic. We should not be surprised if it comes. We must be prepared to manage it.'

    Mr Inderjit Singh, MP and chairman of the Government Parliamentary Committee for Finance and Trade and Industry


    'We are concerned that in a slowdown, there could be retrenchment. More needy residents will come to the Community Development Council (CDC) for social and job assistance. We don't know how severe the repercussions will be. We don't know the impact on the industries.

    'If people lose their jobs, families will be under stress, especially lower-income families. They have very little savings.

    'At the CDC level, we are working out various schemes to see how we can help needy families. We have started a food aid fund. We ask people to pledge $100 per month to purchase food rations for needy residents. We started with donated canned food. Now we give dry rations and frozen food vouchers. We may look into providing hot meals.

    'We are also doing more in terms of job matching, to help people find jobs as quickly as possible.

    'Singaporeans should look into cost- cutting: do away with all those wants, be more prudent in terms of their spending. Go for skills upgrading to increase your earning capacity and your employability.'

    MP and North West district mayor Teo Ho Pin
    Attached Files Attached Files

  3. #3
    Lay Man
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    Question

    Singaproe slip into a recession? What does that mean? Will our ppty prices still rise or not?

    Pls tell me! Telllllll mmeeeeiii !!!!!!!

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    Quote Originally Posted by Lay Man
    Singaproe slip into a recession? What does that mean? Will our ppty prices still rise or not?

    Pls tell me! Telllllll mmeeeeiii !!!!!!!
    Wah lau!

    This is a technical recession, how to accurately tell you the effect? It will depend whether there is a recession or not.

    If it is a recession, I can straight away tell you everything would fall. Down down down!

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    recession?
    I still see people eating at hotel
    q for exp food at eating places

    Seriously how many really care?

  6. #6
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    Very funny!
    Very soon there will only be 1 big bank in every country - the central bank.
    It's like the old days when we all borrow from the central bank.
    Quote Originally Posted by AFP

    Central banks in Europe announce unlimited dollar financing
    Agence France-Presse
    Frankfurt, Germany
    Monday 13 October 2008

    Central banks in Europe announced on Monday that they would provide unlimited amounts of dollar loans over periods ranging from one week to 84 days.

  7. #7
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    Some win, some lose.
    What to do?

    Quote Originally Posted by autoblog
    What recession? Daimler adding 1,000 to payroll next year.
    Chris Shunk
    autoblog
    Sunday, 12 October 2008 7:29PM



    The automotive industry is reeling under serious financial woes, plant closings and job cuts, so news that Daimler AG will be adding 1,000 new people to its payroll next year comes as a bit of a shock. The new jobs will be added globally, with 500 positions going to Daimler's headquarters in Stuttgart, and the rest being distributed around the world. These new positions will reportedly train the automaker's next generation of workers, which are entering the industry at a time when expertise in complex developing technologies are essential for survival. Even with the added jobs, Daimler can't cut any positions until 2012 because of an agreement already in place with its employees. Just like every other automaker, it's hoping to weather the rough time in between by focusing on efficiencies and flexibility wherever possible. So that's one piece of good automotive news, now let's get to work on those stock prices.

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    Quote Originally Posted by buy
    recession?
    I still see people eating at hotel
    q for exp food at eating places

    Seriously how many really care?
    Unfortunately old habits die hard.

  9. #9
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    Quote Originally Posted by Boon
    Unfortunately old habits die hard.
    It's not habit lah.
    It's because they are not affected. That's why they continue to eat.

  10. #10
    What?
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    Quote Originally Posted by UnregĄstered
    It's not habit lah.
    It's because they are not affected. That's why they continue to eat.
    What habit?
    Like going for holidays?

    Quote Originally Posted by TNP

    Recession? What recession?
    The New Paper
    Jazmin Kelly Six
    Friday, 17 October 2008



    It may be turbulent times for the economy, but Singaporeans are still taking to the skies.

    The travel industry has registered an increase of 15 to 30 per cent annual growth.

    For many Singaporeans, overseas holidays are no longer a luxury but have become a lifestyle habit.

    Senior vice-president marketing and PR of CTC Holidays, Ms Alicia Seah, said: 'Travel is already part of our lifestyle, it is the fundamental fabric to freedom.'

    In response to a successful National Association of Travel Agents Singapore (Natas) fair in August, Mr Robert Khoo, CEO of Natas, said: 'Despite Singapore's rising costs in food and transportation, Singaporeans are saving to travel.'

    Record visitors

    This enthusiasm was evident at the three-day fair where a record 65,583 visitors snapped up about $60million worth of travel packages, Natas said.

    Regional business development manager Erik Hon, 29, has not let his wings be clipped by the financial meltdown.

    He has already visited Hong Kong, Bangkok, Paris, Poland, Czech Republic and Slovakia this year alone. Come next January, he will be heading to Thailand for a short holiday and then to London, Amsterdam and eastern Europe next May.

    Mr Hon said: 'I want to pamper myself every quarter... and feel the vibe of another city.'

    As long as his bills are paid and has monthly savings set aside, travelling will be an essential he won't give up, he said.

    On top of being avid travellers, Singaporeans like Mr Hon are also becoming more discerning. They do not mind paying a little more for comfort and a good time.

    Miss Eileen Oh, vice-president leisure of UOB Travel Planners, said: 'We see more value-conscious consumers today than cost-conscious ones.'

    As opposed to settling for a bare-bones of a holiday package, more consumers would gladly top up amounts ranging from '$50 to $500' to savour an enhanced holiday experience, Miss Oh added.

    She also noted that Singaporeans are always on the lookout for good deals and 'tend to go where the currency favours'. This explains the spike in demand this year for destinations such as the US and, most recently, Australia.

    Travel agencies we spoke to said they have been getting bookings for year-end travel from July.

    Some tour operators even reported a sellout of over 70 per cent of their packages. Even after the stock markets started seeing red two weeks ago, most tour operators said they have not received cancellations.

    Popular destinations

    Taiwan, alongside popular winter destinations such as Japan and Korea, saw such great demand that airlines had to put in extra flights or switch to bigger carriers to accommodate travellers, Miss Seah said.

    But, if you want to stretch your holiday dollar further, the best way would still be 'book your holidays early', suggested Hong Thai Travel's advertising and marketing manager, Miss Stella Chow.

    She also advised the budget-conscious to take short-haul, holidays and opt for tourist-class hotels to save more.

    When asked if he would be willing to put up at low-cost accommodations like hostels or budget hotels just so he could make that extra holiday trip, Mr Hon said he would definitely be raring to go 'as long as the room, location and amenities are decent'.

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