The Singapore economy is set to slow down after two quarters of rapid growth, according to the Monetary Authority of Singapore (MAS).
The economy won't grow as rapidly as in the second quarter, when Singapore came out of recession, and in the third quarter when, according to advance estimates, the economy grew 0.8 percent over the same period last year — the first such growth in more than a year.
GDP growth in 2010 is expected to be slower than in previous post-recession periods, says MAS.
There is bad news for workers and job seekers.
Singapore pay cuts have been deeper than those in other Asian economies such as Japan, Hong Kong and Thailand, but less than that in Taiwan, says the MAS Macroeconomic Review which you can download here.
Wages declined in the first half of the year by an average of 3 percent year on year and are expected to go up by just 1.6 percent next year compared to the 4.9 percent average increments in 2007 and 2008.
More worryingly, job vacancy rates in all sectors remain well below their levels before the recession.
Overall,there were only 33 job openings per 100 jobseekers, compared to an average of 72 during the 2005-07 period.
And hirings are not likely to pick up much.
Three-quarters of the 635 firms polled intend to maintain headcount.
The outlook is most pessimistic for the manufacturing sector.
Apart from the biomedical industry, which will see increased employment arising from new investment, such as Medtronic setting up operations in Singapore, most manufacturing companies are not looking to hire in 2010 due to the uncertain business outlook. The closure of Seagate’s hard disk drive manufacturing plant will also see some 2,000 workers being shed by the end of 2010.
Construction activity may weaken into 2010, as several mega commercial and industrial projects reach completion, while few new contracts have been added to the pipeline.
The services sector will account for the bulk of next year’s growth. In particular, those activities that rely on regional demand, such as transport-hub and financial services, could see a firmer recovery, given generally resilient labour markets and supportive fiscal stimulus measures in Asia.
Government revenue down
The government collected 18.8 billion Singapore dollars of operating revenue in the first half of 2009, compared with 19.7 billion during the same period last year. As a proportion of GDP, revenue increased from 15.4% to 15.6% over the same period, indicating that the fall-off in government receipts occurred alongside an even sharper contraction in domestic economic activity, says MAS. Significant declines were recorded for fees & charges, motor vehicle-related taxes, property-related taxes, and the goods and services tax.
Overall, the government recorded a primary deficit of 2.2 billion Singapore dollars (1.8% of GDP) in the first half of this year, reversing the 0.6 billion primary surplus recorded in the same period a year ago. For the current year as a whole, the primary deficit is forecast at 6.4 billion Singapore dollars, compared to the 3.9 billion surplus obtained last year.