Singapore could face sharpest and longest recession ever

Oh dear oh dear… how to go back sg like that!!!!!


SINGAPORE: Singapore is facing what could be its sharpest and longest recession ever. The government's best-case scenario is that an economic recovery will take place in the second half of 2009.


This means Singapore would have suffered five quarters of recession – worse than the Asian financial crisis in 1997.


Just three weeks ago, the government had said economic growth this year could come in between -2 and +1 per cent – itself a revision from a more bullish forecast.


Now, following a series of weak data, the prediction has been revised even lower to a contraction of between 2 and 5 per cent.


Nonetheless, the Monetary Authority of Singapore (MAS) said it does not see a need to change its policy stance for now and some analysts agree this could be the right approach.


Alvin Liew, economist, Standard Chartered, said: "A weaker Singdollar won't be able to help much. First, we can't stimulate external demand and this is not really a cost issue, and we do have imported inflation worries as well."


Singapore's exports have been declining in recent months. Last month, they saw a record 20.8 per cent contraction on-year. The country's key non-oil domestic exports are now forecast to contract between 9 and 11 per cent this year.


David Cohen, director of Asian Economic Forecasting, Action Economics, said: "That's mirrored by Japan, Korea and Taiwan. Even China has not been immune to the contraction in global demand."


"If you look at past few years or the previous recessions – 1997, 1998, 2001 – recovery was fast and strong. We are not expecting that this time around. We might be going into a period where even when we see recovery growth, it will be on a very tame basis – not to exceed 3 to 5 per cent in 2010, 2011," said Mr Liew.


But analysts said Singapore still has some things going for it, like a strong balance sheet and a robust financial system.