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STRATFOR.com
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SINGAPORE: Shaky Economic Recovery Poised To Falter
October 15, 2002
Summary
A sharp and unexpected drop in economic activity in Singapore does not bode well for the country's economic recovery, or for that of other big Asian exporters. Peering forward, things don't look promising. External weaknesses abound, and Singapore also may face some deeper systemic challenges to its traditionally impermeable economy.
Analysis
Singapore's Ministry of Trade and Industry admitted Oct. 11 that it likely will downgrade the country's economic growth targets for 2002, currently estimated at about 3 percent to 4 percent. This follows an expectedly negative estimate of the city-state's third quarter gross domestic product that showed a 10.3 percent annualized contraction from the previous quarter.
In fact, the country is now at risk of falling back into recession after just pulling out of its deepest downturn in decades. Many factors are working against Singapore, including higher oil prices, war fears, the ripple effects of the West Coast port strike, economic weakness in the United States and Europe, and the shallow nature of Singapore's own recovery -- all of which likely are stifling investment and constraining growth.
Singapore's nascent economic recovery is now very much at risk. External cyclical factors are largely to blame, and this means that other export-dependent Asian countries like Taiwan may suffer a downturn in the coming months as well. But there also could be some troubling systemic issues at work -- such as the rise of more sophisticated manufacturing in China and the growing importance of other regional ports -- that threaten to siphon investment away from Singapore and do more sustained damage to its economy.
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Dan
Singapore: Shaky Economic Recovery Poised To Falter . . .