SG Economy

SG Economy: Deputy Prime Minister/Finance Minister Tharman Shanmugaratnam said that a global recession is more likely than not as the US and European economies are at stall speed. In short-term SG will not be immune to a slowdown of the major drivers of the global economy, but while the immediate outlook is gloomy, add that SG has got the fiscal space to deal with it.

UOB add that situation is much bleaker for the EU economies, as 27 mkts in the EU will still end being bigger than the US mkt itself, so there'll be a material impact on SG if there's going to be a EU slowdown. Concurring, CIMB note that if half the world economy were to experience a sharp slowdown, demand for SG's goods and services will plunge, while strength within regional economies such as China can only buy us time but not decouple SG from global conditions.

DBS however held a more optimistic view, noting that economic data coming from the US has only been mixed thus far, while citing fairly healthy US retail sales numbers balancing out recent zero growth in non-farm payrolls. Tip SG robust economic fundamentals and very healthy fiscal position to allow us to weather any foreseeable deterioration in global economic conditions.

Mr Tharman added that the value of direct investments are now equal to 23% of GDP, if the investment rate in the region could be raised to 28% of GDP, that would translate to a 1 ppt addition to GDP each year. At yesterday's summit Mr Tharman and World Bank chief Robert Zoellick also signed an agreement that will see the setting up of the World Bank Group-Singapore Hub.This is aimed at helping to unlock private sector interest in infrastructure projects, especially in developing countries in East Asia.