FT.com / Lex / Macroeconomics & markets - Singapore GDP.
After an annualised quarter-on-quarter contraction of 13 per cent in the first three months last year, [Singapore's] GDP shot up by 22 per cent in the second quarter and 15 per cent in the third. In that context, a smooth extension of that trajectory out of the longest recession since independence in 1965 was always unlikely. Even so, Singapore’s lurch to a 7 per cent contraction in the final three months is worrying.
The optimistic view is that this reflects a simple inventory correction in volatile export sectors such as pharmaceuticals and transport engineering. That may be so: Singaporean manufacturing shrank by 38 per cent in the fourth quarter, having expanded by 30 in the third.
Three things:
First, if Singapore was a company you'd count it as high risk.
Or, second, you'd worry about the qualioty of its accounting, makingn it even higher riosk.
And thirdly, because there's a trend towards financial crisis in tax havens right now you'd put your money on it being one of those likely to be heading for serious trouble.
One for the short sellers, I'd say.
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Richsrd
I don’t believe that Singapore is economically dependent on its “tax haven” business. Its no secret that the Swiss bank subs are growing very quickly out there, but when I met half a dozen leading Singapore law firms only 4 months ago, they were unanimous in saying that they didn’t want or need the “Swiss business” as far better quality business was pouring in from China, India, Taiwan and Indonesia. Those lawyers were worried that Singapore’s courting of the Swiss banks could completely undermine Singapore’s reputation. Seems that they aren’t keen to be seen as “the new Switzerland” and their subsequent reduction of their previously strong bank secrecy laws is very likely to see the “Swiss business” jumping to Hong Kong or Dubai.
I’m sure that Singapore’s poor 4th quarter is equally due to a big reduction in the shipping trade, from where it derives much of its revenue. If the West isn’t buying consumer goods then the Chinese aren’t shipping it, and if the Chinese aren’t shipping it then its not passing through Singapore’s port. If you take a look out to sea at the Malacca Straits the number of tankers and cargo ships which have been sheltering there for literally months until things pick up is mindboggling. Doesn’t look like anything more than a prime example of the global recession to me but the quarterly swings in the figures do indeed suggest such volatility that they may not be able to be relied upon.