http://www.forbes.com/2009/05/21/singapore-quarter-gdp-markets-economy-recession.html
Forbes.com, 22 May 2009, Vivian Wai-yin Kwok
Singapore's GDP Data Encourage Leaders
Forecast-beating figures for Q1 may allow the government to forgo new stimulus measures.
HONG KONG - Singapore's government may hold back its invisible hand, along with any additional stimulus relief, after the economy showed signs of recovery from its worst-ever recession.
Thursday, the Ministry of Trade released forecast-beating gross domestic product data for the first quarter. Singapore's economy contracted 10.1% year-on-year in the three months of 2009, better than the government's advance estimate of -11.5%, released last month. The reading also came in above the market consensus of -10.9%.
On a sequential basis, the economy of the "Lion city" shrank at an annualized and seasonally adjusted rate of 14.6% in the first quarter this year from the last three months in 2008, when the country recorded a 16.4% economic decline.
The actual economic contraction in the first quarter is less severe than the government's preliminary estimates of -19.7% and the average market forecast of -17%. The better-than-expected output in both manufacturing and the financial services sectors, as well as a relatively low employment rate, will allow Prime Minister Lee Hsien Loong and his office to take a breather, the data indicate there is no urgent need to unveil the second stimulus package.
"There are some positive signs of a bottoming out," said Ravi Menon of the Ministry of Trade and Industry at a briefing, adding, "it is not clear that we have begun to rebound from the bottom."
The trade-dependent economy of Singapore fell into the deepest recession in its 44-year history after the country reported negative growth in Q4 2008 and Q1 2009. The declining demand from key importers in the U.S. and Europe seriously hurt Singapore's exports, prompting the government to unveil a $13.7 billion rescue package in January to cushion the blow of the global downturn.
In early April, the Monetary Authority of Singapore announced an easing of monetary policy, the second time since 2003, to readjust the trading range of the secretly packed Singapore dollar. The adjustment effectively weakened the currency by about 1% to 3%.
As first-quarter figures showed Singapore's economy might have gotten out from its bottom, market analysts predict the Monetary Authority will put on hold any plans to weaken the currency further, and to pause its policy of aggressive rate cuts.
The Singapore dollar, which is linked against a secret trade-weighted basket of currencies, was little changed after the announcement. The central bank said Thursday the performance of its currency was consistent with its policy stance, with which the central bank was comfortable.
Despite of the seemingly positive signals, the Singapore government still forecasts the economy to drop by 6% for the full-year 2009, even if it starts recovering in the second half.
Morgan Stanley estimates the sequential quarter-on-quarter decline in Singapore should become less severe going forward, but it will take a while before the figure turns positive--expected in the first quarter of 2010.
"The macro recovery will have to be led by external demand before domestic demand can follow suit, in our view," the securities firm said in a research report published Thursday. "Domestic capex recessions tend to persist, even when growth is already picking up."
"With the strong capex undertaken during the bull years, corporates will need to see capacity utilization rise to an optimal level before further investment can be undertaken," the report explained. "In this regard, the initial phase of the recovery will likely be uneven."
Thomson Reuters contributed to this article.
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Forbes.com, 22 May 2009, Vivian Wai-yin Kwok
Singapore's GDP Data Encourage Leaders
Forecast-beating figures for Q1 may allow the government to forgo new stimulus measures.
HONG KONG - Singapore's government may hold back its invisible hand, along with any additional stimulus relief, after the economy showed signs of recovery from its worst-ever recession.
Thursday, the Ministry of Trade released forecast-beating gross domestic product data for the first quarter. Singapore's economy contracted 10.1% year-on-year in the three months of 2009, better than the government's advance estimate of -11.5%, released last month. The reading also came in above the market consensus of -10.9%.
On a sequential basis, the economy of the "Lion city" shrank at an annualized and seasonally adjusted rate of 14.6% in the first quarter this year from the last three months in 2008, when the country recorded a 16.4% economic decline.
The actual economic contraction in the first quarter is less severe than the government's preliminary estimates of -19.7% and the average market forecast of -17%. The better-than-expected output in both manufacturing and the financial services sectors, as well as a relatively low employment rate, will allow Prime Minister Lee Hsien Loong and his office to take a breather, the data indicate there is no urgent need to unveil the second stimulus package.
"There are some positive signs of a bottoming out," said Ravi Menon of the Ministry of Trade and Industry at a briefing, adding, "it is not clear that we have begun to rebound from the bottom."
The trade-dependent economy of Singapore fell into the deepest recession in its 44-year history after the country reported negative growth in Q4 2008 and Q1 2009. The declining demand from key importers in the U.S. and Europe seriously hurt Singapore's exports, prompting the government to unveil a $13.7 billion rescue package in January to cushion the blow of the global downturn.
In early April, the Monetary Authority of Singapore announced an easing of monetary policy, the second time since 2003, to readjust the trading range of the secretly packed Singapore dollar. The adjustment effectively weakened the currency by about 1% to 3%.
As first-quarter figures showed Singapore's economy might have gotten out from its bottom, market analysts predict the Monetary Authority will put on hold any plans to weaken the currency further, and to pause its policy of aggressive rate cuts.
The Singapore dollar, which is linked against a secret trade-weighted basket of currencies, was little changed after the announcement. The central bank said Thursday the performance of its currency was consistent with its policy stance, with which the central bank was comfortable.
Despite of the seemingly positive signals, the Singapore government still forecasts the economy to drop by 6% for the full-year 2009, even if it starts recovering in the second half.
Morgan Stanley estimates the sequential quarter-on-quarter decline in Singapore should become less severe going forward, but it will take a while before the figure turns positive--expected in the first quarter of 2010.
"The macro recovery will have to be led by external demand before domestic demand can follow suit, in our view," the securities firm said in a research report published Thursday. "Domestic capex recessions tend to persist, even when growth is already picking up."
"With the strong capex undertaken during the bull years, corporates will need to see capacity utilization rise to an optimal level before further investment can be undertaken," the report explained. "In this regard, the initial phase of the recovery will likely be uneven."
Thomson Reuters contributed to this article.
-------------------
Latest updates on Singapore News Alternative:
1. S'pore govt needs holistic Web approach
2. Flight Centre and SIA clash on commissions
3. Singapore, Malaysia seek to build new bridges
4. FEER Appeals Against Singapore Defamation Ruling
5. Malaysia, Singapore eye changes to economic models
6. Foreign workers lives at risk in Singapore
7. Internet Users Finding Help To Evade the State Censors
8. Singapore's Temasek defends costly Bank of America exit
9. Malaysia Proposes Third Bridge Link To Singapore
10. Professors Sir David and Birgit Lane quit Scotland for Singapore
11. Struggling CapitaCommercial to raise $573 mln in rights issue
12. Jurong Aromatics delays project till 2013 on credit crunch
13. Standard & Poor’s rates Vietnam below ‘investment’ grade
14. Singapore's Temasek explains Bank of America sale
15. Thwarted Tiger Airways considers taking local partner in Australia
16. Secular societies should be kept free from the religious right
17. Malaysian PM bids to end rows on visit to Singapore
18. SGX's Nifty Index Futures - another CLOB in the making?
New Videos Added:
1. REMEMBERING 22 SINGAPORE VICTIMS OF ISA
2. Peter Schiff Vlog Report - 21 May 2009
3. China downturn leading to Communist nostalgia - 22 May 00
4. SMU students in Guizhou for Project MAD II
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