Singapore Business Forecast Report Q3 2009

Publication Date	May 2009
Publisher	Business Monitor
Product Type	Report
Pages	64
ISBN Number	1745-0691
Product Code	BMI03899

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Summary

Caught In The Global Maelstrom

Singapore's economy has taken a severe pounding as a result of the global slowdown. Advance estimates by the Ministry of Trade and Industry (MTI) indicated that the economy shrank by an alarming 11.5% y-o-y in Q109, far worse than the 4.2% contraction registered in Q408. This was largely due to dismal double-digit declines in exports in the first three months of 2009. Worryingly, there was a broad-based decline across most sectors, reflecting the indiscriminate fall in demand.

Singapore's reliance on external trade will continue to hamper growth in 2009, and we currently forecast GDP to contract by 7.2%.

Notably, the government has stepped up efforts to engage with Singaporeans via non-traditional media outlets. The authorities have started utilising popular online media outlets including Facebook, YouTube and other forums to engage with citizens, particularly the younger and net-savvy generation. In addition, the government has also launched a new online platform, which consolidates different ministries in a single system, to facilitate a more convenient one-stop interactive tool. On another front, the government has also relaxed rules on online political campaigning, paving the way for all parties to leverage off the internet ahead of the next parliamentary elections scheduled for 2011.

The Monetary Authority of Singapore (MAS) opted for a one-off re-centering of its currency band at its semi-annual policy meeting on April 14, in an effort to boost the island's trade-dependent economy. With inflationary concerns firmly out of the way and the Singapore dollar's relative outperformance of its regional peers in 2008 eroding the island's export competitiveness, weakening the currency appears to be a rational course of action as long as it is done in measured steps. We are currently retaining our end-09 forecast of SGD1.6100/US$ for the Singapore dollar.

In spite of strong headwinds buffeting its economy, Singapore's fundamentals remain strong.

Indeed, Singapore achieves high marks in the infrastructure, institutions and market orientation components of BMI's business environment rating, taking the top position with an overall score of 83.8, ahead of rival Hong Kong. These factors, coupled with the government's efforts to reduce the impact from the recession, should put Singapore in a good position to swing back when the global economy turns a corner. Indeed, once the effects of the current recession have receded, we expect Singapore's economy to resume its long-term trend growth of around 4% a year.

Content

Executive Summary
- Caught In The Global Maelstrom
Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Ratings
- Domestic Politics
- Media Liberalisation A Longer-Term Positive
- The recent easing of media and political rules is a long-term positive for Singapore.
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Outlook
- Full Effects Of Recession To Be Felt In H109
- Advance estimates by Singapore's Ministry of Trade and Industry (MTI) showed that the economy is feeling the
- full brunt of the global slowdown. Almost all sectors of the economy remained weak with the exception of the
- construction sector.
- Economic Activity
- Retail Sector Outlook Becoming Increasingly Gloomy
- Retailers in Singapore are bracing themselves for further pain as consumers continue to tighten their belts in the face
- of what we are forecasting to be the island economy's worst recession on record.
- Monetary Policy
- Currency Band Re-Centered In Line With Our View
- The worsening external trade environment has prompted the Monetary Authority of Singapore (MAS) to depart from its
- existing neutral monetary policy stance and adopt a more aggressive stand to weaken the currency following its
- semi-annual policy meeting on April 14.
- Investment Climate
- Property Sector Weakness To Persist
- The strong gains in property prices over the past few years have finally come to an end, with growth in public housing
- prices following their private counterparts into negative territory in Q109.
Chapter 3: 10-Year Forecast
- The Singapore Economy To 2018
- Solid Growth Trajectory To 2018
- We are fairly upbeat on Singapore's longer-term growth prospects to 2018, forecasting a mild rebound from 2010, before
- a full recovery in 2011, with real GDP forecast to expand at a rate of around 4.0% out to 2018.
Chapter 4: Special Report
- The Outlook For Global Banking
- Business Environment Rating Outlook
Chapter 5: Business Environment
- SWOT Analysis
- BMI Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Infrastructure
- Market Orientation
- Operational Risk
Chapter 6: Key Sectors
- Petrochemicals
- Executive Summary
- BMI estimates that total global ethylene capacity amounted to around 132mn tpa in 2007, with Asia-Pacific
- representing 31.5% of installed capacity and North America a further 27.5%.
- Freight Transport
- Executive Summary
- BMI's newly-released Singapore Freight Transport Report concludes that because of global economic cooling the
- country's maritime freight volume will rise by an annual average of 2.5% throughout the five year 2009-2013
- forecast period.
Chapter 7: BMI Global Assumptions
- Global Outlook
List of Tables
- Table: Political Overview
- Table: ECONOMIC ACTIVITY
- Table: MONETARY POLICY
- Table: LONG-TERM MACROE CONOMIC FORECASTS
- Table: LOAN -TO-DEPOSIT RATIOS, Selected States
- Table: LOAN GRO WTH (% CHG Y-O-Y), Selected States
- Table: COMMERCIAL BANKING BUSINES ENVIRON MENT RATINGS, SELECTED STATES
- Table: BMI BUSINES AND OPERATIONAL RISK RATINGS
- Table: BMI LEGAL FRAMEWORK RATINGS
- Table: ASIA, FDI ANNUAL INFLOWS
- Table: BMI TRADE RATINGS
- Table: TOP EXPORT DESTINATIONS
- Table: Chemicals And Petrochemicals Sector - Historical Data & Forecasts
- Table: Freight Transport Economic Indicators
- Table: GLOBAL ASUMPTIONS
- Table: GLOBAL ASUMPTIONS - LONG-TERM FORECASTS
- Table: Developed States, Real GDP Growth Forecast
- Table: EMERGING MARKETS, REAL GDP GRO WTH FORECAST
- Table: Commodities
- Table: GLOBAL & REGIONAL REAL GDP GRO WTH