Wednesday 25 May 2022 | 23:46 | SYDNEY
Wednesday 25 May 2022 | 23:46 | SYDNEY

GFC: Singapore slung


Malcolm Cook

20 March 2009 11:04

Singapore, since I first visited over 17 years ago, has been a place  many certainties and routines. On the good side, clean roads, good service, and great food. On the bad side, a heavily controlled political system and regular reports of journalists facing court for stories that would not cause too much of a ripple in many other countries. This time a senior editor at the Wall Street Journal has just been fined S$10,000 for contempt of court.

Singapore has done a very good job of running its economy since independence and has prospered in return. From this trip though, it is clear that this long-standing certainty is under its greatest ever challenge, a challenge largely due to the fact that Singapore has tried to do the right thing — maintain a strong export manufacturing base like its other Asian dragons and diversify into services. Singapore chose international finance as one its areas of diversification.

Alas, this means Singapore's small, open economy (too small to rely on raising domestic consumption to maintain growth) is getting hammered on two sides. Its traditional exports are plummeting — the island economy just recorded the tenth straight decline in visible exports and the port scene outside my window is oddly serene. At the same time, its large international financial services sector is suffering a similar fate, with foreign bankers heading to the airport, worldly possessions in tow.

Goldman Sachs now expects the Singapore economy to shrink by 8% in 2009, a gut-wrenching figure the Government has not ridiculed. If this gloomy scenario plays out, Singapore will be the worst hit economy in Southeast Asia and this would be Singapore's worst year ever economically. Showing how the global financial crisis is really turning the tables in this region, The Philippines and Indonesia look like they will be the best performing economies in maritime Southeast Asia in 2009.

Photo by Flickr user wensday01, used under a Creative Commons license.