[Recession gloom overtakes Singapore - and maybe Malaysia too either sooner or later because 'we needed each other' - Air Supply.

"When it falls, we all fall together," said SG's Mr Song. - Editor]

http://www.theage.com.au/business/
2001/07/12/FFX9MFJZZOC.html

Recession Gloom Overtakes Singapore

By MARK MAGNIER

SINGAPORE
Thursday 12 July 2001

Singapore has admitted that it has slipped into recession, the first South-East Asian nation to do so since the 1997-98 Asian economic crisis. But economists say it will not be the last.

"We're going to see a string of these either extremely poor or negative numbers in the near future," said Song Seng Wun, Singapore-based regional economist with G.K. Goh Research. "They're all getting hammered."

Singapore's Ministry of Trade and Industry said on Tuesday that the economy had fallen by a seasonally adjusted 0.8 per cent in the second quarter from a year earlier. This is the second consecutive decline in its gross domestic product, satisfying the technical definition of a recession.

Singapore is the first country to report its second-quarter results. Thailand, Taiwan and the Philippines, which also reported negative first-quarter growth, could also turn out to be in recession when they announce their second-quarter results in a few weeks.

Singapore has been among the hardest-hit by the slowdown in the United States. Foreign trade accounts for three times its GDP.

This compares with about twice GDP for Malaysia, and 0.75 per cent for the Philippines.

Furthermore, a huge percentage of Singapore's foreign trade and manufacturing involves electronic goods.

As the slowdown has intensified throughout the region in the past three months, it has also created an echo effect.

Intel's operations in Malaysia, for instance, may ship semiconductors to Singapore, where they are combined with locally produced disk drives for shipment back to Dell Computer's factory in Malaysia.

"When it falls, we all fall together," said SG's Mr Song.

Economists say there is little the region can do at this stage, other than wait and hope for a global upturn. These relatively small economies have little control over the buying habits of American, European and Japanese mall rats.

And for many of these economies, there is relatively little they can draw on to pick up the slack. Local consumer demand accounts for a small part of their economy.

Furthermore, a growing fear is that European economies will also weaken further in the near future on the heels of the US slowdown.

If that happens, South-East Asian countries may have to wait a year or more before revving up their export engine again.