Singapore economy did not feel good

When I was away in Taiwan, I received news that Singapore economy contracted 4.1% quarter-on-quarter for the third quarter ended September 2016. The economy got worse since the start of the year. First quarter GDP growth was 0.1% and the second quarter was 0.2%.

When compared with last year, the picture looked bad over the first nine months of the year.

Quarter-on-quarter GDP growth rates:

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4
2015 3.5% -2.8% 2.3% 6.2%
2016 0.1% 0.2% -4.1% Future

Can fourth quarter help to lift the Singapore economy?

At the individual company level, the picture was not pretty too. So we hear that Keppel Corporation had cut manpower by 3,000 jobs in Q3 during the release of their third quarter financial results. We hear also that companies were trying to restructure their bonds with bondholders losing money on the debts owed by these companies. Rickmers Maritime and Ezra Holdings are in the news for the wrong reason. It must be real painful for the bondholders.

From the level of the employees, redundancy (such as retrenchment and employees released prematurely on term contracts) had gone up. The number of redundancies is shown below.

Quarter/Year 2015 2016
Qtr 1 3,500 4,710
Qtr 2 3,250 4,800
Qtr 3 3,460 Not available yet
Qtr 4 5,370 Future

Source: MOM

These are the real hard numbers and facts. To get a feel on the ground, one needs to ask around and walk around. When you walk around shopping malls, you can see retail outlets shut waiting for new tenants. When you ask businesses about retail sales, they would say it was slow, not like last year. These are signs of people tightening their purse strings.

The wealth effect of Singapore stock market and the Singapore property market cannot work its magic to lift the gloom of the poor economic performance of the nation. This is because both markets had suffered under the same economic condition. Private consumption, a key component of the economy, took a back seat and this can cause a spiral to the bottom if not arrested in time.

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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