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?