Published May 21, 2009

Economic reality in Singapore

APPARENTLY there is such a disjuncture between the stark hard numbers and everyday economic reality on the ground, that some have begun to ask if way too much - hype, fear-mongering and all - have been made about recessions, not least the one Singapore is still in the midst of and supposedly its most severe to date.

The signs of suffering (or lack of) in commerce and among common folk don't quite match up with the grim data of recent months, it is noted. Red ink has been splashed across the economy for several quarters now, with no industry and no sector unstained, and with the key trade and manufacturing barometers still no closer to any firm recovery, despite tenuous signs of bottoming out here and there. Official projections see the economy contracting at best 6 per cent this year, and possibly up to 9 per cent. In other words, Singapore's S$232 billion economy could shrink by close to one-tenth this year. Amid the slump, meanwhile, consumer confidence has remained fairly intact, with Singaporeans still picking up bargains not only for the home but entire houses and apartments, as well as their perennial favourite - cars.

Sure, the number of workers retrenched surged to 10,800 in the first quarter of 2009 (close to the total for a 'good' year like 2004 and 2005), and some 95,600 residents were jobless as at end-March. But it now looks like job loss here will probably not hit the somewhat alarmist levels projected at the start of the year, though the job market will remain soft for a good while ahead. In other words, the recesssion - for its scale and reach - seems to have inflicted rather less pain than expected or feared. What a happy surprise - if indeed it is at all an 'accurate' reading of the state of the economy.

There's actually little mystery behind whatever disjuncture or disconnect between the data and observations on the ground: that's been the story of the economy, particularly in Singapore. The lament, rather more often, had been in the boom years, when the dichotomy between a top-clip GDP pace and languishing sectors and segments became too glaring to ignore, and sparked talk of the realities of a dual economy. While talk of recovery and rebound has emerged of late on the strength of some hopeful numbers in the US, the numbers actually point to a moderation in contraction, not any firm uptick, and the greater consensus is - uncertainty still prevails.

The job market - the biggest and most telling measure of recession impact, particularly for Singapore - has so far averted bigger blows just because of decisive, all-out efforts on the part of the government to save jobs, as well as the strength of a flexible wage structure and probably greater corporate resilience this time around. But the job market probably yet hasn't borne the full brunt of the recession - employees are still being laid off. What's more important (than conjecture about the painlessness of this recession, for instance) is - strong economic fundamentals here means that the retrenched need not stay jobless for way too long.