<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>4% growth next year: Economists
</TR><!-- headline one : end --><TR>Global slowdown to cause export slump here, which may affect other sectors </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Fiona Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINGAPORE'S economy is likely to grow at about 4 per cent next year - the same rate as this year or even lower, according to a poll of private sector economists.
They expect the slowdown to continue well into next year, as global economic weakness starts to spread beyond the United States.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
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LOOKING AHEAD
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</TD></TR></TBODY></TABLE>Declining demand overseas could cause an extended slump in the key exports sector that may pull down the rest of the economy.
Prime Minister Lee Hsien Loong said in his National Day Rally speech on Sunday night that Singaporeans should expect slow economic growth and more uncertainties next year as an intensifying global slowdown takes hold.
Taking their cue from this projection, some economists are starting to mark down growth forecasts for next year.
Their main concern is the deteriorating external environment.
Europe and Japan have already taken a step into a technical recession and the 'decoupling' story has faded now that Asian economies have seen moderating growth in the second quarter, said OCBC Bank economist Selena Ling.
'Notably, the sub-prime-related mortgage losses and writedowns have only recently crossed US$500 million (S$707 million), the halfway mark to the more than US$1 trillion estimated cost,' she said.
'The fallout on the real economy may take a few more quarters to run its course.'
Weak external demand has only dragged down exports, but the fear is that this may soon spill over to other parts of the economy, which have so far proved resilient, said Citigroup's economist Kit Wei Zheng.
Exports are projected to shrink for the first time since 2001, and trade-related services - such as wholesale, retail, transport and storage - should also start to suffer soon, he added.
The housing market is also a cause of concern.
Barclays economist Leong Wai Ho expects a multi-year price correction in residential property, which would have an impact on the services sector.
But economists hold some hope that the domestic economy will be strong enough to hold up somewhat against a beating from external forces.
The brightest spots are the services and construction sectors.
Both are slowing but should still grow enough to act as a buffer to a downturn this year and next.
'Had this been 2001, we would already have been in recession,' Mr Leong said.
'We are more buffered from an export slowdown by our exportable services engines, the largest building boom in our history and the diverse range of manufacturing.'
HSBC economist Prakriti Sofat added that employment and wages are still growing at double digits, HDB flat values are running at a decade high and interest rates are low - all of which help to prop up the economy.
Tourism may also prove a boon towards the end of next year, as the integrated resorts start to come onstream, boosting visitor arrivals and retail spending.
Another positive sign is that inflation has peaked, which could bring relief to Singapore and many Asian countries that are heavily dependent on domestic demand, said DBS Bank's Irvin Seah.
The most optimistic of the economists polled, Mr Seah believes that 'we are now at the bottom of the cycle and things will start to turn around next year'.
'We have some new drivers coming into play next year.
Apart from the integrated resorts, we're probably going to see some new investments coming in, particularly in pharmaceuticals,' he said.
The good news is that economists do not expect a drastic cut in jobs this year or next.
While an extended slowdown will eventually hit employment, they say the labour market is entering the slowdown from a strong starting point compared to other cyclical downturns.
'The manufacturing sector will probably cut down on capacity, but I don't expect massive layoffs like what we've been through in 2001,' said Mr Seah.
The steady number of projects in the pipeline, such as the integrated resorts and the Jurong Island petrochemical complexes, should help keep overall jobs growth in positive territory, added Citigroup's Mr Kit. [email protected]
</TR><!-- headline one : end --><TR>Global slowdown to cause export slump here, which may affect other sectors </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Fiona Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINGAPORE'S economy is likely to grow at about 4 per cent next year - the same rate as this year or even lower, according to a poll of private sector economists.
They expect the slowdown to continue well into next year, as global economic weakness starts to spread beyond the United States.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>Declining demand overseas could cause an extended slump in the key exports sector that may pull down the rest of the economy.
Prime Minister Lee Hsien Loong said in his National Day Rally speech on Sunday night that Singaporeans should expect slow economic growth and more uncertainties next year as an intensifying global slowdown takes hold.
Taking their cue from this projection, some economists are starting to mark down growth forecasts for next year.
Their main concern is the deteriorating external environment.
Europe and Japan have already taken a step into a technical recession and the 'decoupling' story has faded now that Asian economies have seen moderating growth in the second quarter, said OCBC Bank economist Selena Ling.
'Notably, the sub-prime-related mortgage losses and writedowns have only recently crossed US$500 million (S$707 million), the halfway mark to the more than US$1 trillion estimated cost,' she said.
'The fallout on the real economy may take a few more quarters to run its course.'
Weak external demand has only dragged down exports, but the fear is that this may soon spill over to other parts of the economy, which have so far proved resilient, said Citigroup's economist Kit Wei Zheng.
Exports are projected to shrink for the first time since 2001, and trade-related services - such as wholesale, retail, transport and storage - should also start to suffer soon, he added.
The housing market is also a cause of concern.
Barclays economist Leong Wai Ho expects a multi-year price correction in residential property, which would have an impact on the services sector.
But economists hold some hope that the domestic economy will be strong enough to hold up somewhat against a beating from external forces.
The brightest spots are the services and construction sectors.
Both are slowing but should still grow enough to act as a buffer to a downturn this year and next.
'Had this been 2001, we would already have been in recession,' Mr Leong said.
'We are more buffered from an export slowdown by our exportable services engines, the largest building boom in our history and the diverse range of manufacturing.'
HSBC economist Prakriti Sofat added that employment and wages are still growing at double digits, HDB flat values are running at a decade high and interest rates are low - all of which help to prop up the economy.
Tourism may also prove a boon towards the end of next year, as the integrated resorts start to come onstream, boosting visitor arrivals and retail spending.
Another positive sign is that inflation has peaked, which could bring relief to Singapore and many Asian countries that are heavily dependent on domestic demand, said DBS Bank's Irvin Seah.
The most optimistic of the economists polled, Mr Seah believes that 'we are now at the bottom of the cycle and things will start to turn around next year'.
'We have some new drivers coming into play next year.
Apart from the integrated resorts, we're probably going to see some new investments coming in, particularly in pharmaceuticals,' he said.
The good news is that economists do not expect a drastic cut in jobs this year or next.
While an extended slowdown will eventually hit employment, they say the labour market is entering the slowdown from a strong starting point compared to other cyclical downturns.
'The manufacturing sector will probably cut down on capacity, but I don't expect massive layoffs like what we've been through in 2001,' said Mr Seah.
The steady number of projects in the pipeline, such as the integrated resorts and the Jurong Island petrochemical complexes, should help keep overall jobs growth in positive territory, added Citigroup's Mr Kit. [email protected]
