Singapore's Christmas fails to glisten
By Mariko Oi
Reporter, BBC News Asia Business Report
Christmas at the mall is losing its sparkle
Each night, hundreds of kids come to Tanglin Mall to frolic in fake snow for just 15 minutes.
This is an annual event at Singapore's posh downtown shopping centre.
But it's not just the snow that has been imported. The cold wind of recession has already hit the city state.
Down the road, one of Asia's busiest shopping streets - Orchard Road is brightly lit up for Christmas, attracting a mass of consumers.
But people are spending less, making it one of the toughest Christmases for retailers in years.
"I am trying not to walk into my favourite stores even when I walk pass them because I don't want to be tempted to buy," says Chloe Choy.
"Working in the banking industry, you're always worried that you maybe the next one to go."
Public relations consultant Meera Navaratnam agrees.
"We don't know where the economy is heading so I feel it's important to save for the future. If I buy anything now, it's only for practical reasons."
Consumer squeeze
And the change in their shopping behaviour is reflected in the latest economic figures. Retail sales contracted 8.5% in October, the worst since May 2002.
It is Singapore's first recession since 2002
So is this the demise of consumer spending?
"This is a typical behavioural response to an outlook of higher economic volatility and uncertainty," says Yuwa Hedrick-Wong, an economic advisor to credit card firm MasterCard.
"On one hand, we are seeing a rise in precautionary savings among Singaporeans. On the other, having higher savings and stagnant income mean discretionary spending being squeezed."
Mr Wong says Singaporeans are using their spending money for smaller necessary expenditures, instead of bigger ticket items such as cars.
Motor vehicle sales on the island fell almost 20% in October.
Bright spots
But as consumers try to save money over the holidays, one bright spot is the home entertainment sector.
Video game makers are gearing up for the biggest Christmas ever. Sales of consoles and software are expected to hit a record $50bn this year.
"Sales of Xbox 360 for the current holiday period had been even better than we expected. In October, we had the best year-over-year growth ever in Asia," says Alan Chou of Microsoft Asia.
"If you look historically, gaming has done well during economic downturns."
Mr Chou is careful not to call it recession-proof, but "recession resistant".
"When you think about human nature, it's because of a very simple thing. When times are good, people have a lot of entertainment options. When times are bad and budgets are squeezed, they're thinking of value for money in entertainment."
Recession pinch
But the game makers are in the minority - with many other firms feeling the pinch of the global slowdown.
Singapore relies heavily on exporting its goods and services to the rest of the world - with demand from abroad making up two-thirds of its GDP.
The Singapore government now forecasts that its economy will shrink by 1% for the whole of 2009.
Until the global economy emerges from this gloomy winter, Southeast Asia's wealthiest country may face a frosty year ahead.
By Mariko Oi
Reporter, BBC News Asia Business Report
Christmas at the mall is losing its sparkle
Each night, hundreds of kids come to Tanglin Mall to frolic in fake snow for just 15 minutes.
This is an annual event at Singapore's posh downtown shopping centre.
But it's not just the snow that has been imported. The cold wind of recession has already hit the city state.
Down the road, one of Asia's busiest shopping streets - Orchard Road is brightly lit up for Christmas, attracting a mass of consumers.
But people are spending less, making it one of the toughest Christmases for retailers in years.
"I am trying not to walk into my favourite stores even when I walk pass them because I don't want to be tempted to buy," says Chloe Choy.
"Working in the banking industry, you're always worried that you maybe the next one to go."
Public relations consultant Meera Navaratnam agrees.
"We don't know where the economy is heading so I feel it's important to save for the future. If I buy anything now, it's only for practical reasons."
Consumer squeeze
And the change in their shopping behaviour is reflected in the latest economic figures. Retail sales contracted 8.5% in October, the worst since May 2002.
It is Singapore's first recession since 2002
So is this the demise of consumer spending?
"This is a typical behavioural response to an outlook of higher economic volatility and uncertainty," says Yuwa Hedrick-Wong, an economic advisor to credit card firm MasterCard.
"On one hand, we are seeing a rise in precautionary savings among Singaporeans. On the other, having higher savings and stagnant income mean discretionary spending being squeezed."
Mr Wong says Singaporeans are using their spending money for smaller necessary expenditures, instead of bigger ticket items such as cars.
Motor vehicle sales on the island fell almost 20% in October.
Bright spots
But as consumers try to save money over the holidays, one bright spot is the home entertainment sector.
Video game makers are gearing up for the biggest Christmas ever. Sales of consoles and software are expected to hit a record $50bn this year.
"Sales of Xbox 360 for the current holiday period had been even better than we expected. In October, we had the best year-over-year growth ever in Asia," says Alan Chou of Microsoft Asia.
"If you look historically, gaming has done well during economic downturns."
Mr Chou is careful not to call it recession-proof, but "recession resistant".
"When you think about human nature, it's because of a very simple thing. When times are good, people have a lot of entertainment options. When times are bad and budgets are squeezed, they're thinking of value for money in entertainment."
Recession pinch
But the game makers are in the minority - with many other firms feeling the pinch of the global slowdown.
Singapore relies heavily on exporting its goods and services to the rest of the world - with demand from abroad making up two-thirds of its GDP.
The Singapore government now forecasts that its economy will shrink by 1% for the whole of 2009.
Until the global economy emerges from this gloomy winter, Southeast Asia's wealthiest country may face a frosty year ahead.
