Singapore’s Gross Domestic Products (GDP) contracted 10.1 per cent for the first quarter of 2009 when compared with the same quarter in 2008. This is better than the 11.5 per cent contraction based on earlier advance estimate.
The Ministry of Trade and Industry (MTI) second permanent secretary Ravi Menon said that MTI was surer that they had seen the bottom of the economic downturn. The unknown is how long Singapore will stay at this bottom. Will it be a long ”U” or a short “U” at the bottom?
The latest economic indicators were:
Total Exports @ current prices -26.0% -20.7%
Total Imports @ current prices -31.1% -28.1%
Industrial production index -0.5% -32.8%
Consumer Price Index -0.7% +1.6%
Unemployment rate 1NA 3.2%
Retail Sales Index 1NA -7.3%
1Not available yet
For the first time since 2005, the April’s Consumer Price Index (CPI) declined 0.7 per cent over April last year. This is due to lower costs of transport and communication, housing and recreation. However, food rose 3.6 per cent in April but slowing from a rise of 4.6 per cent in March. The government forecast of inflation rate for 2009 is between -1.0 per cent to 0 per cent. This is expected since we saw 6.5 per cent inflation for 2008 which was a high base to start with.
The April export figures were still dismal. If this does not improve, GDP growth will be severely hampered. For this reason, MTI kept the GDP growth rate for 2009 to be from -6.0 per cent to –9.0 per cent.
The latest unemployment rate stood at 3.2% in March with warnings by trade unions and the Ministry of Manpower that further retrenchment is on the card for the current quarter. This will continue to be a dark cloud hanging over the labour force and consumer spending will be slow as a result. Retail sales Index was a contraction of 7.3 per cent for March which proved that view.
Will it be a long “U” recovery or a short “U” recovery, I leave it to the readers.
Written on 5/27/2009 11:08 AM
Copyright © 2009, the author known as LKT in Singapore.
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