S'pore recession blows ill wind through Asia

S'pore recession blows ill wind through Asia

SINGAPORE (AFP): The winds of recession in Singapore are blowing dark clouds across Asia, with analysts saying a reliance on exports has left the region vulnerable in the face of the US- led global slowdown.

Although most countries may escape the stigma of being tagged "in recession" growth targets are being slashed close to zero.

Analysts believe that with the exception of China, Asian countries will find it difficult to escape year-on-year negative growth.

"With the economies of Japan, Euroland and other emerging markets similarly floundering, Asia's export-led economies will also face challenges in locating alternative sources of external demand," said Standard Chartered strategist John Tan.

Japan, the Philippines, South Korea and Taiwan, like Singapore, were particularly exposed either all or in part to tumbling demand for electronics.

As finance ministers throughout Asia wrestle with their growth forecasts, revising them down, Taiwan has already admitted to being in danger of joining Singapore in recession.

"Taiwan's situation is very worrisome," says Chen Poh-chih who chairs the Council for Economic Planning and Development.

The Asian Development Bank says South Korea and Malaysia "are likely to see the sharpest slowdowns" in East Asia, although Malaysian Prime Minister Mahathir Mohamad has rejected the prospect of recession by its official definition.

The Asian problem this time ironically stems from the cure for the 1997-98 financial meltdown. Then, the United States was the shining knight who came to the rescue offering an export haven.

Four years on, the United States is ailing and Asia is suffering from becoming over reliant on the US market, particularly its technology needs.

"An unfortunate by-product of Asia's recent crisis is that many of the region's economies have become more dependent on export-led growth, with the US as the favored target destination, in lieu of undertaking concrete economic reforms and restructuring to rebuild solid foundations for domestic demand growth," said Tan.

"Although the US underwrote Asia's 'V-shaped' recovery in 1999, the present decline in the US IT sector is exporting recessionary forces to the region in the form of collapsing exports."

Thailand and Hong Kong have been quick to distance themselves from Singapore's woes which are seeded in an economy where the electronics sector contributes to more than half of manufacturing output, and manufacturing activity accounts for 22 percent of Singapore's gross domestic product.

Thai Prime Minister Thaksin Shinawatra has ruled out recession saying Bangkok "is not so concentrated on IT exports, and we have restructured our economic base to focus on the grassroot economy."

Hong Kong financial secretary Antony Leung said his economy did not rely on the same exports as Singapore and hence it has been "less affected" by the slowdown in the technology sector.

But neither Thaksin or Leung could deny their economies are hurting.