S'poreans brace for tough year amid regional crisis<\/p>\n
SINGAPORE (AFP): Singaporeans are bracing for tough times in
\n1998 as the financial turmoil that has wrought havoc and misery
\nin much of Southeast Asia weighs on the city state's prosperous
\neconomy.<\/p>\n
Economic growth forecast for trade-driven Singapore next year
\nhas dived to as low as 1.8 percent from around seven percent
\nexpected in 1997 while corporate earnings are projected to shrink
\nto single-digit growth.<\/p>\n
"It's quite certainly much tougher times than Singaporeans had
\nexperienced in the past. What we are witnessing is essentially a
\nsituation where growth is going to slow across all sectors of the
\neconomy," said Eddie Lee, economist with investment house Vickers
\nBallas.<\/p>\n
Vickers Ballas has forecast Singapore's economic growth to
\nfall to 1.8 percent in 1998 largely due to excess capacity and
\nweakening demand stemming from regional turmoil, Lee said.<\/p>\n
A recent poll of 17 economists conducted by the local Straits
\nTimes daily showed an average growth forecast of 4.4 percent --
\nbelow the official five to seven percent range.<\/p>\n
Analysts said the economic slowdown should be underpinned by a
\ndecline in regional trade, the slump in the property, financial
\nand construction sectors and the uncertain outlook for the key
\nelectronics sector.<\/p>\n
Profits of Singapore's cash-rich banks would also be hit by a
\ndecline in loans to an oversupplied property market as well as
\npossible loan defaults at home and in the region.<\/p>\n
"As the situation is still fluid, we don't have a clear idea
\non how much profits will be hit but going by the last recession
\nin the mid-80's, banks' profits in Singapore had plunged," said
\nLai Yeu Huan, banking analyst with J. M. Sassoon here.<\/p>\n
Singapore banks are also under pressure to raise interest
\nrates amid fears that funds are gradually moving away from the
\nsafe-haven local dollar which in the middle of December crashed
\nto levels last seen six years ago.<\/p>\n
Although the U.S. dollar has risen by 17 percent against the
\nSingapore dollar since July when Thailand floated its ailing
\ncurrency and triggered off regional foreign exchange turmoil, the
\nSingapore unit had strengthened against most of its regional
\ntrade partners.<\/p>\n
But hospitals in Singapore, regarded as a key Asian health
\nhub, are beginning to feel the pinch of a stronger Singapore
\ndollar against most other regional currencies.<\/p>",
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