Double Dip Recession


We can reasonably expect Singapore to plunge back into recession at the end of this quarter. If it does, we will be the first country in Asia, and possibly the world, to experience a double dip recession in the aftermath of the global financial crisis.

Our economy first dipped into a technical recession in Q3 2008.

Advance estimates show that our GDP contracted 6.8% quarter-on-quarter in Q4 of 2009.

If our GDP contracts again this quarter, we will officially be in another recession, in just over a year.

With Obama vowing to fight the banks with banking reforms, China implementing tightening measures to cool the markets, and many other countries reining in their stimulus spending, the picture may not be very rosy for Singapore given its very open economy.

Being highly open also means being highly susceptible to external factors.

Although PM Lee chose to say Singapore’s 2009 Q4 growth is 3.5% in his New Year Message, that figure is not the conventional quarter-on-quarter figure. The figure looks positive, but Q4 of 2009 actually contracted, as confirmed by the press release from our trade ministry which started with the grim statement: “Economic activity in Singapore slowed down in the fourth quarter of 2009.”

Trade Minister Lim Hng Kiang has recently said this in parliament: “A double-dip recession is not likely.” If he’s talking about Singapore averting a second technical recession, then with all due respect, he may possibly be wrong.

Do you think Singapore will plunge back into recession?


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  1. Vote for SGP instead of SIN for Singapore on

    Q1 of 2010 seems fine though… If another recession is coming, I guess it’s gonna be around Q3 of 2010… meaning… we might have a gloomy NDP ahead

  2. Singapore is like a small company. When the world market is booming the effect is multiplied, but when it slows down, it’s the same. Most people here seems to think that the government has learnt things from this recession, but there is nothing to learn. With its small population, Singapore WILL ALWAYS rely on external demand. If that slows down, it’s bye bye Broadway.

  3. Hi, I am a bit confused when i first read this. But now I realized that in the article, you mistake 2008 for 2009 twice.

  4. I think the “government” way of comparing quarter against quarter of the year before is a standard applied in Singapore (and in US companies financial report). So, I wouldn’t think of it too much as misinformation. This type of year-on-year comparison reduces seasonal fluctuation but introduces lags.

    Recession is ill-defined and I think generally, based on the data they have, there will not be a coming “obvious-to-all” recession. Taking the macro view, I do think though all the government debts will cause significant inflation and/or governments to go bankrupt, which will cause a recession.

  5. the q-on-q figure is also seasonally adjusted, so seasonal fluctuations are accounted for.

    worldwide news media often uses q-on-q, so if sg falls into a technical dual-dip based on q-on-q data, it will definitely be news to cnn, bbc, wsj, etc.

    and the negative investment sentiments will definitely be felt here.

  6. Our largest export market USA is still in deep trouble. Fundamentally not much has changed there and the housing woe is not over yet (more foreclosures coming). The stock market is artifically propped by low interest and “monetary easing” (print money) which only delay but not solve the problem (huge and increasing dept). The adverse effect will surely and unfortunately be felt here, particularly when China and India are beginning to tighten their (otherwise unsustainable) loose monetary policy…

  7. with all the good news coming in – lower unemployment, IRs opening, more jobs – don’t you think the economy will be propped up? or do you think it’s artificially being propped up?

    some people say the stock market looks ahead of the economy. if the recent dips are of any indication, the economy in the near future surely doesn’t look too rosy.

  8. “The stock market looks ahead of the economy”. This is probably one of the most often overused misleading statements out there. I am sure the stock market predicted the last stock market crash too especially at a high. Face it, the stock market is the biggest IR there is, nothing more nothing less.

  9. Look at it this way. If an economy dips 90% (extremely crazy levels) last year, and then you say…yeah!…we have a growth this year of 3.5%. How many percentage growth are you really experiencing in REAL terms? And what is the current volume? Just 13.5% of the previous 100%.

    The economy has contracted tremendously since the onset of the crisis. Any growth you see is relative to that near hit-bottom level. Even if they announce a growth of say 10%. So what??? You have already lost over 30% previously and you’re still in the negative ‘equity’ region.

    I personally think we won’t have a double dip recession because we never left the recession in the 1st place.

  10. Doraemorn, I don’t think the numbers were that bad last year, but the uncomfortable and inconvenient truth is that Singapore as always needed to rely on foreigners to do the heavy lifting. Without all those Foreign Government stimulus, where would Singapore be now?

    The true test then will be when all those stimulus is finally lifted.

  11. Normal, of course. How can it drop by 90%? I only meant it as an example.

    The point is this. If you drop 30% and then you recover by 30%. Are you BACK at where you first started?

    The answer is NO.

    100 less 30% is 70. Now if you increase 70 by 30%…how many is that? Its 91. Not 100. The return to base is exponentially higher.

    The point is, the economy shrank tremendously in the last 2 years (I think in the range of 30%). EVEN if we increase back by 30%…do you know how FAR back we are really in??? So why are property prices rising when we’re really going backwards.

    3% or even 10% is really nothing. We need MUCH more than that.

  12. Doraemorn, I agree with your math, so calm down, just surprised with your extreme example that’s all.

    Actually, I believe in the next few years a bigger crisis is coming and today’s recession will turn into a depression, which is scary since Singapore has only known growth up until this point.

  13. sunder sharma on

    Another recession not only for singapore for the entire world and developing country is expected after 2nd quarter of 2010. This is due to another debt crises that evolve from the european countries. presently greece only default in their credit and anothe 2 or 3 countries may follow the same path.
    Also, in US, corporate real estate crash is already begins which is yet to spread over to the outside world.
    Watch for these items in the comming days.

  14. if it’s so easy to predict, then one can simply short the market and just sit and wait to get rich.

    the fact is the markets now reflect high volatility, which basically means a lot of uncertainty – the general sentiment is that people are unsure whether the economy will go up or go down or remain stagnant.

  15. Agreed or rather short term it’s hard to say. With the media hyping it up with any small improvement and barely mentioning everything that’s bad, it can go anywhere the next few months, but in the long term (2 or 3 years), this ship is going down big.

  16. the media here cannot be trusted – ST is ranked 154th and our journalists are the least trusted in a recent survey (followed by politicians!).

    why do you say this ship is going down big? and do you mean Singapore or the world economy as a whole?

  17. World economy as a whole and by extension Singapore. You heard it here first 😉 but in 3 or 4 years time, unless space aliens land here on earth and they’d love to import our iPods, etc, most people in Singapore will either work for the government or hawker centers. Why? If you have any understanding at all of the U.S economy and the real numbers and by extension its effect on the world, the outcome can not be in doubt. Add in the surely mounting bad debt plus economic figures not adding up in China (car sales are way up but gas consumption remains the same, wink wink), and it’s bye bye Broadway.

  18. sunder sharma on

    I am happy more bloggers are optimist here. For the next 2 years the economy will be a roller-coaster only. (on ASIA FOCUS)
    Fearing on the raising inflation, if china pull back its credits from the market, that will definetely affect the asian market. But it is sure, china must do something to stop the present inflation there.
    This is apart from the European Debt downfall.

  19. Not sure about Singapore coz we are still in recession. However, I believed US will definetly head for a double-dip recession.

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