Positive figures may not indicate economic recovery for Singapore
Channel NewsAsia - Thursday, August 27
SINGAPORE: Singapore’s economy may be coming out of the woods. The country’s manufacturing sector saw July’s output go up by 12.4 per cent, above expectations.
Despite the upbeat economic figures, not everyone is celebrating just yet.
Analysts said some people may have regained confidence to spend again, thanks to early government measures like the Jobs Credit Scheme to help companies cut costs and minimise lay—offs.
But risks like the current drought in China could drive up food prices.
Song Seng Wun, regional economist, CIMB—GK Research, said: "If that cup of coffee that you’re going to buy is going to cost more in an environment where there’s still uncertainty about sustainability of growth, it could derail growth again."
It also does not help if factories do not pick up enough orders for them to expand or hire more staff.
The real test will come during the year—end festive season when businesses traditionally see strong spending.
However, with more bargain—hunters these days, businesses may be forced to lower prices and accept smaller profit margins.
"Then they (companies) may not be in a great hurry to put more money on the ground for plant expansion or to expand their workforce beyond what’s required," said Mr Song.
Concerns about employment explain why Singaporeans remain cautious about spending. Observers said cyclical downturns are likely to become more common.
While the Singapore government has said it will decide at year—end whether another stimulus package is required, analysts said such interventions can be tweaked into incentives for companies and workers to see, for instance, the importance of lifelong learning in order to counter future slowdowns.
Channel NewsAsia - Thursday, August 27
SINGAPORE: Singapore’s economy may be coming out of the woods. The country’s manufacturing sector saw July’s output go up by 12.4 per cent, above expectations.
Despite the upbeat economic figures, not everyone is celebrating just yet.
Analysts said some people may have regained confidence to spend again, thanks to early government measures like the Jobs Credit Scheme to help companies cut costs and minimise lay—offs.
But risks like the current drought in China could drive up food prices.
Song Seng Wun, regional economist, CIMB—GK Research, said: "If that cup of coffee that you’re going to buy is going to cost more in an environment where there’s still uncertainty about sustainability of growth, it could derail growth again."
It also does not help if factories do not pick up enough orders for them to expand or hire more staff.
The real test will come during the year—end festive season when businesses traditionally see strong spending.
However, with more bargain—hunters these days, businesses may be forced to lower prices and accept smaller profit margins.
"Then they (companies) may not be in a great hurry to put more money on the ground for plant expansion or to expand their workforce beyond what’s required," said Mr Song.
Concerns about employment explain why Singaporeans remain cautious about spending. Observers said cyclical downturns are likely to become more common.
While the Singapore government has said it will decide at year—end whether another stimulus package is required, analysts said such interventions can be tweaked into incentives for companies and workers to see, for instance, the importance of lifelong learning in order to counter future slowdowns.
