<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Q1 growth may plunge by 7% to 10%
</TR><!-- headline one : end --><TR>But economists say quarter-on-quarter data a better sign of health </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Fiona Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINGAPORE'S trade-dependent economy is likely to have shrunk by a record figure in the first three months of this year, as exports plummeted at an unprecedented pace in January.
Compared to the same period last year, the contraction in the economy could be severe enough to land in the double digits - far worse than the 4.2 per cent year-on-year decline seen in the fourth quarter of last year.
Preliminary figures on the first-quarter gross domestic product (GDP) will be released by the Ministry of Trade and Industry only tomorrow, but economists are already expecting the worst.
This is partly because Prime Minister Lee Hsien Loong has indicated that the Government will also announce tomorrow that it has lowered its forecast for full-year growth. The current prediction is for the economy to shrink between 2 per cent and 5 per cent this year.
Economists say the grimmer outlook is likely due to the crash in exports, which plunged a record 34.8 per cent in January from a year earlier before improving slightly in February with a decline of 23.7 per cent.
Export figures for last month will also be released tomorrow - three days earlier than planned - and are expected to remain weak, dragging down the first-quarter growth number.
Citigroup's Kit Wei Zheng estimates that the economy shrank 10 per cent in the first quarter against the same period a year ago, which would be the worst-ever performance since records began in the 1970s.
Most other economists are weighing in with predictions of a contraction of between 7 per cent and 9 per cent. A government poll of 20 economists and analysts in February found that the average prediction was for a decline of 8.5 per cent.
'To say the Singapore economy is weak at present would be somewhat of an understatement,' sums up HSBC economist Robert Prior-Wandesforde, who is tipping a 9.1 per cent contraction for the first quarter. He expects the economy to continue shrinking in the following three quarters.
'The primary cause is obvious - collapsing exports which are breaking all the wrong kind of records,' he said. Adding to that is also the bursting of bubbles in property, investment and credit, which grew in the run-up to the current crisis.
Barclays economist Leong Wai Ho expects the economy to have shrunk 8.1 per cent in the first quarter, with the outlook for subsequent quarters 'bleak'.
Rising unemployment in the United States will weigh on Singapore exporters and manufacturers, and the malaise will rapidly spread to other sectors such as trade services, transportation and financial sector activity, he says.
But the dismal predictions also stem from pure statistics. The economy was strong in the first quarter of last year, so compared to that period, growth in the first quarter of this year will be particularly anaemic.
A more up-to-date check on economic health would be to take quarter-on-quarter figures, that is, to compare the growth in the first quarter this year with the growth in the fourth quarter of last year.
The view is slightly better from this angle: it looks as though the pace of decline on a quarter-on-quarter basis has eased in the first quarter from the previous one.
Between October and December last year, the economy shrank by a record 16.4 per cent over the previous quarter, on a seasonally adjusted annualised basis.
For the January to March period, however, the quarterly contraction is likely to be smaller, which means the freefall could have touched bottom.
'The first quarter probably marks the worst GDP contraction in year-on-year terms, but in quarter-on-quarter terms, the bottom is probably behind us, in the fourth quarter last year,' said Mr Kit.
He believes that the quarter- on-quarter figure, which is a better measure of the speed of the decline, could hit zero or even become slightly positive as early as the second quarter, assuming that exports have turned the corner.
PM Lee's recent remark that the full-year contraction will not go into double-digit territory is also seen as a good sign.
'He's basically saying we're seeing an improvement already, because given that the first quarter is so bad, for the full-year decline to stay in single digits, it implies that things have to improve from here,' Mr Kit said.
[email protected]
<HR width="50%" SIZE=1>
A more up-to-date check on economic health would be to take quarter-on-quarter figures, that is, to compare the growth in the first quarter this year with the growth in the fourth quarter of last year.
</TR><!-- headline one : end --><TR>But economists say quarter-on-quarter data a better sign of health </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Fiona Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINGAPORE'S trade-dependent economy is likely to have shrunk by a record figure in the first three months of this year, as exports plummeted at an unprecedented pace in January.
Compared to the same period last year, the contraction in the economy could be severe enough to land in the double digits - far worse than the 4.2 per cent year-on-year decline seen in the fourth quarter of last year.
Preliminary figures on the first-quarter gross domestic product (GDP) will be released by the Ministry of Trade and Industry only tomorrow, but economists are already expecting the worst.
This is partly because Prime Minister Lee Hsien Loong has indicated that the Government will also announce tomorrow that it has lowered its forecast for full-year growth. The current prediction is for the economy to shrink between 2 per cent and 5 per cent this year.
Economists say the grimmer outlook is likely due to the crash in exports, which plunged a record 34.8 per cent in January from a year earlier before improving slightly in February with a decline of 23.7 per cent.
Export figures for last month will also be released tomorrow - three days earlier than planned - and are expected to remain weak, dragging down the first-quarter growth number.
Citigroup's Kit Wei Zheng estimates that the economy shrank 10 per cent in the first quarter against the same period a year ago, which would be the worst-ever performance since records began in the 1970s.
Most other economists are weighing in with predictions of a contraction of between 7 per cent and 9 per cent. A government poll of 20 economists and analysts in February found that the average prediction was for a decline of 8.5 per cent.
'To say the Singapore economy is weak at present would be somewhat of an understatement,' sums up HSBC economist Robert Prior-Wandesforde, who is tipping a 9.1 per cent contraction for the first quarter. He expects the economy to continue shrinking in the following three quarters.
'The primary cause is obvious - collapsing exports which are breaking all the wrong kind of records,' he said. Adding to that is also the bursting of bubbles in property, investment and credit, which grew in the run-up to the current crisis.
Barclays economist Leong Wai Ho expects the economy to have shrunk 8.1 per cent in the first quarter, with the outlook for subsequent quarters 'bleak'.
Rising unemployment in the United States will weigh on Singapore exporters and manufacturers, and the malaise will rapidly spread to other sectors such as trade services, transportation and financial sector activity, he says.
But the dismal predictions also stem from pure statistics. The economy was strong in the first quarter of last year, so compared to that period, growth in the first quarter of this year will be particularly anaemic.
A more up-to-date check on economic health would be to take quarter-on-quarter figures, that is, to compare the growth in the first quarter this year with the growth in the fourth quarter of last year.
The view is slightly better from this angle: it looks as though the pace of decline on a quarter-on-quarter basis has eased in the first quarter from the previous one.
Between October and December last year, the economy shrank by a record 16.4 per cent over the previous quarter, on a seasonally adjusted annualised basis.
For the January to March period, however, the quarterly contraction is likely to be smaller, which means the freefall could have touched bottom.
'The first quarter probably marks the worst GDP contraction in year-on-year terms, but in quarter-on-quarter terms, the bottom is probably behind us, in the fourth quarter last year,' said Mr Kit.
He believes that the quarter- on-quarter figure, which is a better measure of the speed of the decline, could hit zero or even become slightly positive as early as the second quarter, assuming that exports have turned the corner.
PM Lee's recent remark that the full-year contraction will not go into double-digit territory is also seen as a good sign.
'He's basically saying we're seeing an improvement already, because given that the first quarter is so bad, for the full-year decline to stay in single digits, it implies that things have to improve from here,' Mr Kit said.
[email protected]
<HR width="50%" SIZE=1>
A more up-to-date check on economic health would be to take quarter-on-quarter figures, that is, to compare the growth in the first quarter this year with the growth in the fourth quarter of last year.
