Singapore Says Economy Is in Recession

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

July 11, 2001

Singapore Says Economy Is in Recession

By WAYNE ARNOLD

Get Stock Quotes Look Up Symbols Separate symbols with a space. Portfolio | Company Research U.S. Markets | Int. Markets Mutual Funds | Bank Rates Commodities & Currencies INGAPORE, July 10 — Singapore said today that its economy had slipped into recession, becoming the first of what economists predict will be a long list of export- dependent Asian countries that will suffer from the economic slump in the United States.

Preliminary estimates by the Trade and Industry Ministry indicated that Singapore's economy shrank 0.8 percent in the second quarter compared with the first three months of this year, its second consecutive quarterly decline. The new data mark the first time that Singapore's economy has fit the technical definition of a recession since the height of the Asian financial crisis in 1998. The news helped send the Singapore dollar to an 11-year low against the United States dollar.

The ministry blamed slower growth in the United States, especially in the electronics industry, for the deteriorating performance of the Singapore economy. It said the downturn in the United States had also dimmed the outlook for exports to Europe and the rest of Asia. "With all the three main external engines faltering, Singapore's growth in 2001 will be significantly affected," the ministry said. It lowered its forecast for economic growth this year to 0.5 percent to 1.5 percent, down from an earlier estimate of 3.5 percent to 5.5 percent.

With no natural resources and a population of about four million, Singapore has little to shelter it from the global technology downturn. The electronics industry accounts for most of Singapore's exports, and the United States is one of Singapore's largest trading partners, so Tuesday's numbers came as little surprise to economists or financial markets. "This is going to be a bad year for Singapore," said Liew Chih Wai, an analyst at Standard & Poor's in Singapore.

The more populous economies in Asia, like China's, have sizable domestic economies to insulate them from a downturn abroad; less-developed economies, including Indonesia, Malaysia, Thailand and the Philippines, are buffered to some extent by large agricultural sectors and revenues from other resources, like natural gas and oil.

Even so, Singapore's well-manicured economy is unlikely to be the last to slip officially into reverse this year. Economists say the Japanese economy has almost certainly begun to shrink, and many expect Taiwan, Malaysia, Thailand and the Philippines to show recessionary trends once they release their own second-quarter data.

Economists also warn that even those Asian economies still posting statistical growth, notably Indonesia, have entered "recessionary environments," with growth rates too low to prevent joblessness from rising. Sluggish economic reforms have left Asia's banking industry mired, retarding the growth of domestic opportunities and combining with political instability to deter foreign investment.

"These economies are in a holding pattern," said Song Seng Wun, an economist at G. K. Goh Securities in Singapore. Until exports to the United States recover, he said, foreign investment and economic reforms will continue to suffer.

Mr. Liew, the Standard & Poor's analyst, and economists here said that affluent, authoritarian Singapore was relatively well-prepared to ride out the downturn. With at least $75 billion in foreign currency reserves and no external government debt, Singapore's economists have ample room to soften the recession's impact on citizens.

http://www.nytimes.com/2001/07/11/business/worldbusiness/11SING.html?ex=995515200&en=ab9dedc609e61b52&ei=5006&partner=ALTAVISTA

-- Martin Thompson (mthom1927@aol.com), July 11, 2001


Moderation questions? read the FAQ