Singapore could face its single worst quarter of growth next year an economist has said.
Dr Chua Hak Bin, head of equity research at Citigroup said yesterday that Singapore’s first quarter GDP could contract by 7 to 8 per cent from the year before.
He was speaking at the Singapore Press Club’s seminar on the financial crisis held at the Singapore Press Holdings.
‘The worst quarter of contraction we have faced has been minus 6.5 per cent during the tech bust. But we are likely to see minus 7 to 8 per cent in the first quarter next year. This would be the single worst contraction,’ he said.
Dr Chua also predicted that Singapore could face five consecutive negative quarters of growth. It has never had more than four consecutive negative quarters and had three during the Asian financial crisis.
This would be his worst case and would be caused by further weakness in the economies in the neigbourhood such as Malaysia and Indonesia as the crisis moves closer to home.
‘It’s not too hard to imagine our neighbourhood also falling into a recession which also questions whether Singapore can hold up.’
For countries in the region, oil constitutes a bulk of their trade, but with plunging oil prices - it fell below US$44 a barrel - as well as commodity prices in general, the risks to their economies have escalated, Dr Chua said.
With global demand taking a hit, and Singapore’s exchange rate having not weakened as much, it is hard to see Singapore exporting its way out of a recession, he said.
But he said the Sing dollar is likely to see further weakening to $1.60 to 1.65 against the US dollar in the next six months. A weaker Sing dollar makes its exports cheaper.
However there is some light at the end of the tunnel.
Singapore being a net importer, will find some relief from lower oil prices.
The country is also in a better position to use fiscal policy to help the economy and he said some $3 to $4 billion could be used in the upcoming Budget which could mean a substantial reduction in both corporate and personal income tax rates.
The Government may also restart $4.7 billion worth of deferred constuction projects that will create jobs and stimulate the economy.
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Next Quarter Set to Worsen
By Robin Chan
5 December 2008
Singapore could face its single worst quarter of growth next year an economist has said.
Dr Chua Hak Bin, head of equity research at Citigroup said yesterday that Singapore’s first quarter GDP could contract by 7 to 8 per cent from the year before.
He was speaking at the Singapore Press Club’s seminar on the financial crisis held at the Singapore Press Holdings.
‘The worst quarter of contraction we have faced has been minus 6.5 per cent during the tech bust. But we are likely to see minus 7 to 8 per cent in the first quarter next year. This would be the single worst contraction,’ he said.
Dr Chua also predicted that Singapore could face five consecutive negative quarters of growth. It has never had more than four consecutive negative quarters and had three during the Asian financial crisis.
This would be his worst case and would be caused by further weakness in the economies in the neigbourhood such as Malaysia and Indonesia as the crisis moves closer to home.
‘It’s not too hard to imagine our neighbourhood also falling into a recession which also questions whether Singapore can hold up.’
For countries in the region, oil constitutes a bulk of their trade, but with plunging oil prices - it fell below US$44 a barrel - as well as commodity prices in general, the risks to their economies have escalated, Dr Chua said.
With global demand taking a hit, and Singapore’s exchange rate having not weakened as much, it is hard to see Singapore exporting its way out of a recession, he said.
But he said the Sing dollar is likely to see further weakening to $1.60 to 1.65 against the US dollar in the next six months. A weaker Sing dollar makes its exports cheaper.
However there is some light at the end of the tunnel.
Singapore being a net importer, will find some relief from lower oil prices.
The country is also in a better position to use fiscal policy to help the economy and he said some $3 to $4 billion could be used in the upcoming Budget which could mean a substantial reduction in both corporate and personal income tax rates.
The Government may also restart $4.7 billion worth of deferred constuction projects that will create jobs and stimulate the economy.
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