Strong recovery seen for Singapore

Source : Business Times - 10 Jan 2009

WITH the global economy facing substantial downside risks this year, there seems to be no escaping further pain in the short term. But in the medium to longer term, there are opportunities to be had - and Singapore can look forward to a strong recovery.

That was the message panellists had yesterday for the 300 members of the business community who attended the 7th annual Business Outlook Forum, jointly organised by the Singapore Chinese Chamber of Commerce & Industry and The Business Times.

Manu Bhaskaran, CEO of Centennial Asia Advisors, said Singapore’s high exposure to the world economy is not the only reason things could get more sticky.

The economy was overheated prior to the crisis, meaning Singapore entered it with a high cost structure that will require substantial restructuring measures to correct.

For Singapore, a key risk is unemployment, said Kelvin Tay, executive director of product and services consulting at UBS Wealth Management.

According to UBS, 30,000 jobs here will be cut this year. This, Mr Tay said, is more severe than it would have been if the economy had not been overheated going into the crisis.

As for investment strategies, Roy Varghese, foundation adviser and director of the financial planning practice at ipac financial planning Singapore, said that in an environment where asset quality is uncertain and valuation difficult, diversifying a portfolio and holding it for the long term would be wisest.

On a brighter note, Mr Bhaskaran said that if Asian economies rebound in 2010 as he expects them to, Singapore companies would be in a unique position to leverage on China and India’s resurgence, with opportunities for the stronger ones to scale up regionally.

At the global level, Mr Tay said that averting deflation will be an important challenge this year. Both he and Mr Bhaskaran also expressed certainty that a decline in the US dollar is only a matter of time as fiscal stimulus grows.

The forum closed with a panel discussion chaired by Vikram Khanna, associate editor of The Business Times.