Investorstoday

Wednesday, January 11, 2012

Singapore Nears a Recession






Singapore is threatened with a technical recession after three volatile GDP reports.  Second quarter GDP dropped by 5.9% followed by a 1.5% rise in the third quarter and an initial print of a 4.9% drop in the fourth quarter on the back of a 21% contraction in the manufacturing sector. 

The volatility is important as Singapore is an important manufacturing and export hub for Europe and Asia. 

In addition, the property sector has taken off with a strong influx of hot money from India and China.  Analysts are predicting a 25% drop in property prices over the next few years as demand slows despite the release of new supply. 

The government has been tightening the screws on the real estate market for some time with little success but recent laws restricting immigration and new real estate tax appear to be having the intended effect.

The key over the next two years will be to shift manufacturing to new growth areas while maintaining current production levels in the face recessionary tradewinds.







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