Economy
Recession fears
Despite a built-up cushion, global woes hit Singapore’s exports in a big way - with worse to come. Comment. Seah Chiang Nee
Jul 19, 2008

Singapore is hitting a really bad patch and no one can say how bad - or how long - things will fall before the sun shines again.

Singapore’s selling point for decades, its strong economy – measured by GDP and reserves growth – is now looking a little fray as the global waves hit its our shores.

Bugged by high oil and food prices all around them, middle-class and poor Singaporeans are becoming more and more unhappy as their quality drops.

Last week there was is a brief respite to the oil crisis as prices fell from a high of $147 to $130 a barrel, but it’s too early to pronounce it is over.

Meanwhile, the value of its foreign investments has dropped by US$15-US$20b - so far, led by declines in US and European banks.

This is could be the worst performance in history for both Temasek and the Government Investment Corporation (GIC), despite assurances that they are long-term (30 years) investments.

At home, the government's actions against its political opponents and the way some were carried out in and outside the court have brought heat from some people at home and abroad.

Charges of ‘inept’ leadership and policies that worsen inflation are sounding out almost daily, loosening the bonds that existed between the governed and the governing.

Amidst all these, the centerpiece - the economy - on which the government uses to justify its crackdowns and controls, is beginning to show trouble as a result of the global woes.

(Leaders have often said that as long as the economy is strong, all other problems can be solved.)

In the latest report, Singapore’s non-oil domestic exports in June fell 10.5% to $12.8b, far worse than the 2.8% drop economists had been predicting.

It was due to sharp declines in shipments to key markets such as the United States, Europe and China. The rate of decline was the same as the previous month.

Seven of its 10 major markets registered drops in shipments, led by the 24% fall in exports to the USA, while exports to Europe declined 16% and were down 12% to China. That spells trouble ahead.

Economists are predicting more gloom in the immediate future - even a possible technical recession.

Song Seng Wun, regional economist at CIMB-GK Research said "We should be prepared for even more ugly export numbers in the coming months."

The city's gross domestic product (GDP) grew at a much slower annual pace of 1.9% percent in the second quarter from 6.9%.

According to the Straits Times, a senior executive from the Government of Singapore Investment Corporation (GIC) said that the global downturn will last longer than the tech bubble burst eight years ago.

Mr. Ng Kok Song told a gathering of top private bankers and senior fund managers that policy-makers here face more uncertainties, including inflation and the US presidential race.

Any recession, even a technical one, could affect jobs and business in Singapore. Citizens are worried about mass retrenchment, low salaries and low bonuses. Meanwhile, inflation continues at record high.

Public unease

Some businessmen and workers are already feeling the pinch, as indicated by the following online discussions excerpted with thanks from SammyBoy forum.

Jobs hard to come by
SG_local_SG
My friend is going to wrap up his business if he can't find taker. Many whom his business associates business are also not performing well.
Cash book flow keeps dipping low.
Not just local employee are going to be out of job, even local businesses are also going to be out of business too.
The only employee and businesses stays are foreginers, it is clear cut that govt are not keen to keep local business to stay afloat despite govt so-called to encourage singaporean to be enterprenuer.

newyorker88
I am not a successful person to look up upon, but since my end of career with the SAF, I started out of my own. Failed a couple of times before I finally gotten something...
.. No business is recession proof, not even food services. Been through two major recessions and looks like this coming one is going to be worse than the '98 one.

thomas_king
Doing business in Singapore has changed dramatically over the past 2 to 3 years. Mainly due to the run-away inflationary cycle, the cost of doing business shoots up so much that most small businesses cannot survive.
Nowadays, success in business in Singapore means having economy of scale. Old Chang Kee, big huge operation, economy of scale, low cost raw materials and supplies.
Spread fixed expenses across multiple stores and per unit cost of providing a back-end function drops.
If you take a look around you, most businesses that are still thriving nowadays are really large operation and small biz are having a hard time keep their neck above the water...

a sensing of job market...
wolfiexx1
I work in airfreight, tonnage dropping like mercury cooling, most customers do not have much cargoes to ship out now.
Important customers are switching to sea freight unless critical. Fuel surcharges are ridiculous. Most of the people in my line are complaining about the same thing.

Frankiestine
I am in the steel industry. Prices have been shooting up. Steel used in construction such as rebar has doubled in cost. But people are still buying.
Problem is most of the projects that are currently running now the cost were based on 2 to 3 years back when steel prices were still stable, so where are they getting the extra to pay for the material.
Big question mark! (There’s a) high probability of 'do now think later how to pay'.
So bad debt is going to shoot up and many construction related companies is going to go bust just like the 80s.

PiYai
In almost all contracts, price fluctuation is the liability of the contractor. You have to be savvy enough to claim force majeure, that this is not normal price fluctuation, but a crisis beyond your control.
However, again, most contracts allow for time, not costs for force majeure, so, the savvy part and your client's wealth and goodwill come in.
Have only a single successful experience, and that was with an international oil & gas major (wealthy and good). SammyBoy forum

Singapore in technical recession?
elfinchilde cna forum
what technical?
Prices of food, water, electricity, oil etc have gone up, public transport due to go up, inflation up, exports down, wages at a constant/not matching inflation (except for ministers' salaries. ooh.)
Global outlook down; US, our major export market, is down.
If this is not a recession, what is?
The surest sign is when a year ago, ministers' pay hiked up from 1.2mil to 1.9 mil, and now they say they can't raise workers' wages because it will "lead to an inflation spiral." The numbers are just a game of obfuscation.
The facts, however, were there long ago.

nextdoor
Highly possible...a lot of unfavourable data has yet to surface.
Trade (stocks) with care folks! (CNA forum)