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