After a week 'off the tools' chance has found me here in Provence, in the birthplace of Rene Char , arguably the best French poet of the second half of the twentieth century. Also as chance would have it there is some rather preoccupying news on the economic front from Sigapore. Eddie will not be happy. Blogging will be light as I am still trying to master the french - vivre la difference - AZERTY keyboard).
Singapore, one of the world's most trade-dependent economies, on Monday reported its worst quarterly contraction on record due to twin blows from the outbreak of severe acute respiratory syndrome and global economic weakness. The city state's gross domestic product shrunk by 11.4 per cent in the second quarter from the first and 4.2 per cent from a year ago. "Singapore has suffered a series of extraordinary events - Sars, regional terrorism, the slump in the global technology industry and a weak US economy," said Paul Schymyck, an economist for consultancy IDEAglobal in Singapore. On Saturday the administration cut its official forecast for full-year GDP growth to between zero and 1 per cent, from 0.5 per cent to 2.5 per cent.
It estimated that growth in the second half would be between 1.3 per cent and 3.3 per cent, making it unlikely that Singapore would suffer a technical recession, defined as two consecutive quarters of economic contraction. But it warned that unemployment would climb to 5.5 per cent, its highest rate since the mid-1980s, as big companies, including Singapore Airlines, port operator PSA, Neptune Orient Lines and Singapore Press Holdings cut jobs to save costs. Economists said they were confident of a recovery in the second half due to signs that the economy in the US, Singapore's biggest trading partner, was on the rebound, while Sars had been brought under control.
Singapore's central bank last month decided to ease monetary policy as it re-centred its secret policy band against a basket of foreign currencies to weaken the Singapore dollar and boost exports.The services sector, which accounts for 70 per cent of GDP, fell 13 per cent from the previous quarter and 3.1 per cent from a year ago. However, the city state has already seen a revival in its vital tourism industry, which was hit hard by the Sars virus, with tourist arrivals falling by two-thirds from a year ago. Manufacturing output declined 7.2 per cent from a year ago due to weak demand in the global electronics sector. Electronics account for half of Singapore's non-oil exports. "The feedback from tech companies is on trend for higher sales towards the end of the second half, with manufacturing leading the economic recovery," said Song Seng Wun, an economist with GK Goh Research. The composite leading index, an indicator that tracks economic activity for the next three quarters, signaled a recovery as it rose 2.9 per cent in the second quarter after falling by 1.5 per cent in the first.
Source: Financial Times