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  1. #1
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    Singapore : in Recession

    Singapore, in Recession, Ends Currency Gain Policy (Update1)
    By Shamim Adam



    Oct. 10 (Bloomberg) -- Singapore fell into its first recession since 2002 and the central bank ended a policy favoring gains in its currency to help support the economy.

    The Monetary Authority of Singapore, which relies on the currency rather than interest rates as its main policy tool, said today it's shifting to a ``zero-percent appreciation'' stance. Gross domestic product contracted an annualized 6.3 percent in the third quarter from the previous three months, after shrinking a revised 5.7 percent between April and June, the trade ministry said in a separate statement.

    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 U.S. and Europe saps growth. Singapore, which manages its dollar against a basket of currencies, wants to support exporters such as Venture Corp. as global demand slows.

    ``The whole world has gone on an easing policy and Singapore is no different,'' said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore. ``We are likely to face a prolonged period of slow growth or recession, maybe for the next two years. This downturn is unlike previous downturns.''

    The trade ministry said today the city's economy will grow about 3 percent in 2008, from an earlier estimate of as much as 5 percent. The economic contraction in the third quarter compares with the median forecast of an annualized 0.3 percent growth in a Bloomberg News survey.
    Inflation Peaks Inflation, which reached a 26-year high earlier this year, has peaked, the central bank said. Consumer prices will increase between 6 percent and 7 percent this year, and gains will ease to between 2.5 percent and 3.5 percent 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,'' the monetary authority said. ``Inflation is expected to trend down in 2009 as the global and domestic economies slow.''

    The Federal Reserve, European Central Bank and four other central banks lowered interest rates on Oct. 8 in an emergency coordination that was followed in Asia by China, Taiwan and South Korea. The Reserve Bank of Australia cut its key rate by one percentage point on Oct. 7, the most since a recession in 1992.

    The cuts may not be enough to avert a global downturn stemming from the worst financial meltdown since the Great Depression. The International Monetary Fund this week forecast the world's advanced economies will expand next year at the weakest pace since 1982, stifling growth in emerging nations.


    Exports Slump

    Singapore's $161 billion economy declined 0.5 percent last quarter from a year earlier, compared with a revised 2.3 percent 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.
    The island's manufacturing industry, which accounts for a quarter of the economy, contracted 11.5 percent last quarter from a year earlier, compared with a revised 4.9 percent drop in the previous three months, according to today's report.

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


    Financial Services

    Services climbed 6.1 percent in the third quarter from a year earlier, slowing from a 7 percent 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 percent 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,'' the government said in today's report.

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

    The figures today are computed from data for July and August. Revised numbers will be released next month.

    bloomberg.com

  2. #2
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    This is great news, maybe Singapore will be a bargain again

    Their stock market has crashed greatly, much more than Thailand, it's almost down 30% in the last 6 months, maybe more, I might have to look at their numbers again

  3. #3
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    Singapore SGX is crashing big time, more than 50% YTD

    a lot of hot air in that market, more than Thailand apparently, which is still a good value with their stocks at 1 P/B

  4. #4
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    Quote Originally Posted by Butterfly View Post
    This is great news, maybe Singapore will be a bargain again

    Their stock market has crashed greatly, much more than Thailand, it's almost down 30% in the last 6 months, maybe more, I might have to look at their numbers again
    -30% in 6 months is tame compared to SET's more than 50% in 5 months and with a way to go yet.

    So many Thai firms at boot sale prices and still dropping, with every indication that 400 is no longer a support but just another number on the way down.

  5. #5
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    Quote Originally Posted by Butterfly
    a lot of hot air in that market
    With such a heavy economic dependence as a "hub" for trade and commerce in the region Singapore is extremely vulnerable to a worldwide downturn. The fallout will be far worse than in other countries which are more self sufficient economically.

  6. #6
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    Quote Originally Posted by keda
    -30% in 6 months is tame compared to SET's more than 50% in 5 months and with a way to go yet.
    actually it was more than that for Singapore,

    SET is only down -45% for YTD,

  7. #7
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    I accepted your numbers on Singapore, didn't need to check, but SET's -51% since May.

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    since May, it has been brutal, luckily it was up before

  9. #9
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    UPDATE



    Singapore's exports suffer biggest plunge in almost 7 years
    18-12-2008
    Fiona Chan

    Singapore's exports last month suffered their deepest plunge in almost seven years, signalling that the economy could shrink again in the fourth quarter.

    Non-oil domestic exports dived for the seventh month in a row, down 17.5 per cent on top of a 15 per cent drop in October.

    The "usual suspects"--electronics and pharmaceuticals, which together make up half of exports--were mainly to blame, said HSBC economist Prakriti Sofat.

    Electronics shipments fell for the 20th straight month by 17 per cent, while drug exports logged their ninth consecutive drop, falling almost 50 per cent.

    But the decline has now gone beyond specific sectors and markets.

    Demand for exports sank across all of Singapore's top 10 markets and most of its products, according to data released by IE Singapore yesterday (December 17).

    Even excluding electronics and pharmaceutical products, exports dropped by nearly 10 per cent, the worst in at least five years, said Sofat.

    Shipments to the United States, Europe and China--Singapore's three biggest markets--plummeted by almost 30 per cent on average.

    For the rest of Asia, including Malaysia, Hong Kong, Indonesia and Japan, exports fell by about 20 per cent.

    Emerging markets were the only bright spot. Exports to places like Latin America, North Africa and the Middle East jumped 41 per cent, after falling 18 per cent in October.

    The weak export numbers come on the heels of other dismal economic indicators. Retail sales dipped in October by the most in six years, while industrial production data last month sank to a record low.

    This "reinforces the likelihood" that economic growth in the fourth quarter will stay negative, said Citigroup economist Kit Wei Zheng.

    Singapore's economy shrank by 0.6 per cent in the third quarter over a year earlier, the first time it has done so since the Sars period in 2003.

    Exports are likely to remain below water for at least the first half of next year, economists said. Businesses and consumers will continue to cut back on spending, as economies around the world struggle to get back on their feet.

    The US purchasing managers' index for new factory orders, which leads Singapore's exports by about four months, is standing at its lowest level in 30 years, said Morgan Stanley economists.

    "As a benchmark, in the 2001 cycle, exports contracted by as much as 31 per cent at the trough," they noted.

    David Cohen of Action Economics also predicted that things "will get a little worse first before they get better".

    "The recent export data out of Japan, China, Korea and Taiwan have all shown similar weakness, and with the global economy still deteriorating, the first quarter is certainly not going to be pretty."

    China, in particular, disappointed last week when its exports declined for the first time in seven years, illustrating its vulnerability to the global downturn.

    So far, the anticipated boost from the pharmaceuticals sector has yet to materialise, Cohen added.

    "For exports and production in general, we continue to wait for a pick-up in the biomedical sector, but that remains a disappointment," he said.
    Drugs output is supposed to help smoothen the vagaries of economic ups and downs as it follows its own production cycles.

    The weakening Singapore dollar is unlikely to be enough to offset falling exports, and at best can provide only limited relief for exporters, said Citigroup's Kit.

    Economists do not expect further depreciation of the Singdollar to help exporters. "The exchange rate is primarily a medium-term policy tool and ineffective as a short-term counter-cyclical measure," said DBS economist Irvin Seah.

    "The problem we face now is demand weakness, not uncompetitive pricing in exports. Even if we weaken the currency, any benefits are likely to be offset by continued sluggishness in demand."

    Seah expects exports to shrink about 6 per cent this year, with a further contraction of 6.5 per cent next year.

    The government has said it expects exports to fall 5 to 7 per cent this year, and to range between -1 and 1 per cent next year.

    asianewsnet.net

  10. #10
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    Quote Originally Posted by Norton View Post
    Quote Originally Posted by Butterfly
    a lot of hot air in that market
    With such a heavy economic dependence as a "hub" for trade and commerce in the region Singapore is extremely vulnerable to a worldwide downturn. The fallout will be far worse than in other countries which are more self sufficient economically.
    That's the great caveat with Singapore - they're highly dependent.

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