Please DO NOT REPLY to this e-mail directly. For enquiries, please e-mail cs@dpgroup.com.sg |
|
Market Focus |
|
| Is Singapore bottoming-out the crippling recession? | |
|
In the home ground, Prime Minister Lee Hsien Loong and Minister Mentor Lee Kuan Yew has warned in February that the economy could shrink between 8 percent and 10 percent in 2009, if exports continue to slump.
Total trade fell by a seasonally adjusted 14 per cent in the first quarter, less than the 18 per cent contraction the previous quarter, according to data released by the trade ministry. But on a year-on-year basis, total trade shrank by 28 per cent in the first three months, compared to the previous quarter's decline of 9.6 per cent. The export-oriented economy is highly dependant on the health of the world's major economies which buys much of its exports, including microchips and pharmaceuticals. And Singapore's road to recovery is largely dependent on how fast global economies can pick themselves up from the crippling recession that originated from the United States since last 2007. Shifting our attention away from the city state, it is evident that efforts made by U.S. President Barack Obama to sign into law a $787 billion US stimulus package seems to shine a glimpse of light on the world largest economy's hope for recovery. The package aims to boost government spending, especially on infrastructure and schools, along with tax cuts. And recent news shedding the likelihood of a US recovery by late 2009 has somewhat boosted consumers' confidence in the global market. While Singapore analysts and the government said that first quarter 2009 could mark the very deep bottom of this economic cycle, and the likely rebound of the US economy by late 2009 seems to provide some optimism to the city state, there are still no decisive indicators of economic recovery. In fact, famous global investor Jim Rogers had also shared his views on the long term pain ahead for the United States coupled with high inflation and interest rates issues as a result of these short-term measures undertaken to revive the US economy. As the world looks towards more optimism for a global economic recovery, Singapore expects trade to be weak for the rest of 2009, though further declines of the magnitude in trade seen earlier this year seem unlikely. Despite that the stock market has rallied, gaining 21 per cent in May, while local industrial production has seen its decline leveling off, Singapore government has cautioned all businesses to remain prudent and vigilant in their business investment and spending, till the real bottoming-out effect came to light. |
|