Singapore Business Forecast Report Q2 2010 : Market Research Report

Singapore Business Forecast Report Q2 2010

Published by: Business Monitor International

Published: Feb. 5, 2010 - 70 Pages

Executive Summary: Benefiting From The Return Of External Demand
Chapter 1: Political Outlook: Long-Term Political Outlook; Liberalisation Likely To Slow Over Next Decade; Singapore faces very limited political risks in the near term and we expect the ruling People’s Action Party to retain its; monopoly on power.
Table : Pol itical Over view
Chapter 2: Economic Outlook: Economic Activity; Riding On Trade Winds; Singapore is poised for a rebound in 2010 as we anticipate the strong growth momentum to continue over the; coming quarters.
Table : ECONOMIC ACTIVI TY: Currency Forecast; A Measure Of Stability In 2010; The SGD will see a measure of stability in 2010 compared with 2009 as the global economy continues to recover, taking; the unit to SGD1.38/US$ by end-2010.
TABLE: EXCHANGE RATE: Fiscal Policy; Fiscal Position Unscathed In Downturn; We expect Singapore’s budget deficit to reach just 1.0% of GDP for FY2009, boosted by stronger-than-expected; revenue collections.
TABLE: FISCAL POLICY: Business Environment Outlook; Longer-Term Productivity A Priority; We believe that the government’s policy of limiting access to cheaper foreign labour will spur greater technological; investment going forward.; Banking; Loan Growth To Accelerate 2010; Loan growth will accelerate in 2010, boosted by improving macroeconomic conditions. However, consumer loan growth will; likely lag business loan growth as property prices cool.
Chapter 3: 10-Year Forecast: The Singaporean Economy To 2019; Solid Growth Trajectory To 2019; We are fairly upbeat on Singapore’s longer-term growth prospects to 2019, forecasting a moderate recovery from 2010; before a full recovery in 2012, with real GDP forecast to expand at a rate of around 4.3% out to 2019.
TABLE: Long -Term Macroeconom ic Forec asts
Chapter 4: Special Report: Political Risk In The Next Decade; What To Expect In 2010-2019
Table : Countr ies Facing Major Leadersh ip Success ion In 2010-2019
Table : Countr ies At Risk Of Major Pol itical Uphe aval
Table : Countr ies At Risk Of Interst ate Confl ict Or Heightened Bilater al Tens ion
Table : Countr ies Facing Secess ion ist Or Autonomy Movements , Insurgenc ies , Or Civil Wars
Table : Pivot al States
Chapter 5: Business Environment: Business Environment Outlook
TABLE: BMI BUSINESS AND OPERATIONAL RISK RATINGS: Institutions
TABLE: BMI LEGAL FRAMEWORK RATINGS: Infrastructure
TABLE: LABOUR FORCE QUALITY
TABLE: ASIA , ANNUAL FDI INFLOWS: Market Orientation
TABLE: BMI TRADE RATINGS: Operational Risk
TABLE: TOP EXPORT DESTINATIONS
Chapter 6: Key Sectors: Food And Drink
Table : Food Consumpt ion Ind icators — Histor ical Data & Forec asts: Pharmaceuticals
Table : Pharm aceut ical Market Iind icators , Histor ical Data and Forec asts
Chapter 7: BMI Global Assumptions: Global Outlook; 2010 Looking Rosier
TABLE: GLOBAL AND REGIONAL REAL GDP GROWTH
TABLE: de veloped market exch ange rates
Table : Emerg ing Market Exch ange Rates
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES
TABLE: EMERGING MARKETS

Abstract

The strong economic data that have been coming out from key economies in recent monthsincluding the US, China and India have been very encouraging for a trade-dependent economylike Singapore. Indeed, Singapore’s real GDP growth rose by 0.6% year-on-year in Q309, turningpositive after three consecutive quarters in negative territory. Moreover, we have also becomeslightly more optimistic for the global economy in 2010, expecting real growth to reach 2.8%. Assuch, we now project Singapore’s real GDP growth to recover to 3.9% in 2010 (compared with3.2% previously), from a contraction of 2.3% in 2009 (compared with -3.6% previously).

Meanwhile, Singapore’s longer-term political outlook is sanguine and we do not expect any majorchanges to take place in the political scene over the next decade. Under our core scenario, theruling People’s Action Party will still hold tightly to power, but gradually take steps towards politicalliberalisation. Over the time period, we also see limited threats of social unrest as the governmenthas successfully promoted racial and religious harmony. Moreover, if the economy continues toperform well (in line with our expectations), stability will be further ensured as the ruling partyremains popular.

O ne of the key questions Singapore will have to address is falling productivity levels, especially inthe wake of an influx of foreign workers, who now make up 37.6% of the total workforce. Unsurprisingly,there has been a slight backlash against foreigners by the locals who claim to have lost outon job opportunities. The government has since stated that it will take steps to slow immigration,adding to an existing policy of fixed quotas for companies hiring foreign workers. We believe thatthe government’s policy of limiting access to cheaper foreign labour will spur greater technologicalinvestment going forward. However, the limits on foreign labour will constrain goods production inthe near term.

S ingapore’s fundamentals remain strong. Indeed, Singapore achieves high marks for the infrastructure,institutions and market orientation components of BMI’s business environment rating, takingthe top position with an overall score of 83.8, ahead of rival Hong Kong. Even though Singapore isbadly affected by the global slowdown, we do not expect the recession to have any lasting impacton the state. Indeed, Singapore’s business-friendly policies and open economy place it in a goodposition to recover when the global economy picks up.

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Singapore Business Forecast Report Q2 2010

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Abstract