Singapore Business Forecast Report Q1 2009

Publication Date	October 2008
Publisher	Business Monitor
Product Type	Report
Pages	67
ISBN Number	1745-0691
Product Code	BMI02913

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Summary

Economy Shifting To A Lower Gear

The economy slid into recession for the first time since 2002 in Q308, according to advance estimates from the Ministry of Trade and Industry (MTI), as exports and manufacturing - which contracted by 11.5% year-on-year (y-o-y) in real terms - slumped. However, we caution that problems may not be over yet as Singapore continues to struggle with a drop in demand for manufacturing goods. A slowing Asian economy will hamper Singapores service industries and its position as a transport hub. We are forecasting real economic growth to drop to 3.9% in 2008 (from a dazzling 7.7% in 2007); and although we envisage a recovery to 4.5% growth in 2009, we highlight that risks remain firmly skewed to the downside.

The workforce expects a sizeable influx of workers thanks to the countrys highly criticised immigration policy. Population is expected to rise from 4.7 million to about 6.5 million by 2050. This has created anxiety amongst the lower-paid local workers, who fear they will have their incomes kept low by a higher supply of low-income workers, while access to better paying jobs are blocked by middle income workers.

The Monetary Authority of Singapore (MAS) announced a shift in policy to 'zero percent appreciation of the Singapore dollar nominal effective exchange rate (NEER) policy band in October as the republic slid into its first recession since 2002. With the MAS easing monetary policy for the first time in five years clearly showing an increasing focus on growth, we cannot rule out further easing going forward, especially if the city-states economy continues to deteriorate.

In response to rising unemployment, and the political unrest this may foster, Singapores Workforce Development Agency (WDA) recently unveiled a new strategy to maintain competitiveness of the city-states workers, with an emphasis on continuing education and training (CET) in order to help lower-income groups adapt to structural changes in the economy and move up the pay scale. WDA has been helping workers since its inception in 2003, when it was established in order to fight unemployment during the last recession. Currently, the WDA is using CET to provide industry-centric training on top of academic upgrading to aid workers in their career advancements.

Content

Executive Summary
Economy Shifting To A Lower Gear
SWOT Analysis
BMI Political Risk Ratings
Chapter 1: Political Outlook
- Domestic Politics
- Death Of Opposition Leader Resurrects Opposition Concerns
- The demise of Reform Party leader J.B. Jeyaretnam in September is a major blow for the countrys opposition parties.
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Activity
- Economy Faces Recession Amid Global Turmoil
- Following 2007s dazzling growth rate of 7.7%, Singapores economy has lost its verve, thanks largely to the ongoing liquidity crunch and the effect it is having on global demand.
- Monetary Policy
- Monetary Policy Eased As Recession Hits
- We recognise the increasing risks to our view that the central bank will maintain its current tightening stance in its
- October meeting in light of recent weak economic data. That said, the worst is not over on the price front.
- Property Market Outlook
- Economic Worries To Cool Property Market
- Private home prices in Singapore registered a fourth consecutive quarter of decelerating growth in Q308, according to data from the Urban Redevelopment Authority (URA), underscoring our view that the city-states housing boom has passed its peak.
- Labour Market
- Labour Laws Under Review
- Limited regulatory obstacles in the labour market have proven to be a real boon to the city-states world-class business climate, with a score of 83.5 out of 100 for rigidity of unemployment in BMIs business environment ratings helping it to
- first place in our overall rankings.
Chapter 3: 10-Year Forecast
- The Singapore Economy To 2018
- Solid Growth Trajectory Over 2009-2018
- We are fairly upbeat on Singapores growth prospects over 2009-2018, forecasting annual real GDP growth to recover from a disappointing 2008 and remain above 4% out to 2018.
Chapter 4: 10-Year Forecast
- Why The US Can Remain World Superpower
- Wealth Is Shifting East...
- The USs current financial woes will not necessarily undermine its position as a global superpower.
Chapter 5: Special Report
- SWOT Analysis
- BMI Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Infrastructure
- Market Orientation
- BMI TRADE RATINGS
- Operational Risk
Chapter 6: Key Sectors
- Telecommunications
- Autos
Chapter 7: BMI Global Assumptions
- Global
- United States
- Eurozone
- Japan
- China
- Commodities
Tables
- Table: Singapore Political Overview
- Table: Economic Activity
- Table: Monetary Policy
- Table: Singapore Long-Term Macroeconomic Forecasts
- Table: Geopolitical Power Index
- Table: Bmi Business And Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Table: Labour Force Quality
- Table: Asia, Fdi Annual Inflows
- Table: Top Export Destinations
- Table: Telecoms Sector - Internet - Historical Data & Forecasts
- Table: Singapore Automotive Sector Registered Vehicles - Historical Data & Forecasts
- Table: Global Assumptions