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.