Worst may be over, but brace for more job losses: MAS

Worst may be over, but brace for more job losses: MAS

The Monetary Authority of Singapore says the worst may be over for Singapore's economy which recorded its sharpest drop – a staggering 19.7 percent slump – in the first quarter of this year .

But there's no reason to cheer yet. The central bank foresees more job losses and several false starts before the economy actually picks up. The only certainty is it isn't going to happen this year.

By the end of the year, "net employment, excluding construction, could fall by more than the 19,800 job losses recorded during the Asian Financial Crisis in 1998".

Don't blame the government, please.

As the central bank rightly says, Singapore is so export-oriented the health of its economy depends on the world at large. So if the economy doesn't get better, you know where the problem lies. Not in Singapore.

"Almost 60% of our exports are destined for economies that are expected to be in outright recession in 2009," says the MAS.

It cites another reason why the economic outlook is so uncertain -- the swine flu outbreak. It's too early to tell how far the disease will spread and what the economic effect will be.

Really, now is not the right time to expect rock-solid economic forecasts.

But the central bank had to come out with its half-yearly review and so it ends up saying why the economic outlook is so hard to read at the moment beyond this woeful certainty:

The domestic economy is not expected to stage a decisive rebound this year.

Recovery is likely to be slow and gradual unlike in previous downturns and there could be several "false starts", says the MAS Macroeconomic Review released today.

The good news is the Singapore economy, being "extremely open", will "pick up more strongly than other countries when the global recovery eventually gets underway".

But the situation now is uniformly gloomy. The Review says:

* The employment outlook has weakened.
* Job losses will be concentrated in the manufacturing and trade-related sectors. Employment prospects for most manufacturing and trade‐related industries have dimmed significantly. Indeed, severe job losses could be expected given the deepening global recession and its impact on regional trade flows.
* Wage growth will moderate significantly.
* The electronics and chemicals clusters remain weak.
* The air cargo segment remains grounded on a weak IT outlook. A supply overhang looms over the container shipping industry.
* Prospects for the domestic financial sector remain weak in the near term.
* There is slower lending activity. Domestic non‐bank credit declined for the fourth consecutive month in February, as business loans weakened in line with the broader economic slowdown.
* Increases in building and construction loans have levelled off.
* The rest of the economy could see further downward adjustments.

http://forums.delphiforums.com/sunkopitiam/messages?msg=28128.1