Macro

Macro: PM Lee said the global economy is “deeply troubled” and there’s a risk of a relapse into a second global recession in the short term amid economic problems in the U.S. and Europe. He added that Spore is vulnerable to these external problems, so “we should be prepared for turbulence ahead”, though drawing on the nation’s reserves should only be an “absolutely last resort.” Lee made his comments at the swearing-in ceremony of Tony Tan as Spore’s 7th president yday.
Separately, BoA-ML highlights that leading indicators- stock prices, tech industrial production, electronics leading index, PMI new orders - all point to a 59% chance of Spore entering a recession. The multi-variable prediction is in line with the house’s call for a 2nd straight quarter of sequential contraction in Spore's GDP in 3Q.
History shows NODX to be the most reliable, signalling 4 out of Singapore's last 5 recessions, failing to catch only the one triggered by the Sars epidemic. NODX now signals a 41% possibility of a downturn, based on shrinking exports in July.
Nevertheless, the house believes that "a recession, if it does materialise, will likely be of the milder rather than the more severe form" and also likely to be less deflationary.