Economists lower growth forecast

Source : Straits Times - 4 Sep 2008

MAS survey reveals a more bearish outlook, with a 4.2% expansion

Private sector economists are becoming more bearish over Singapore’s growth prospects for this year, as the global economic slowdown tightens its grip.

On average, economists now expect 4.2 per cent expansion this year, according to the latest Monetary Authority of Singapore survey released yesterday.

This is still regarded by economists as solid growth, given grim global conditions, but it is well down from the 5.5 per cent they had predicted in the previous quarterly poll in June.

Next year’s growth is expected to be 4.6 per cent, the survey found. The economy grew a zippy 7.5 per cent last year.

The revision comes amid growing signs of an economic slowdown here, including a retreat in exports in recent months, and the worst manufacturing slump since late 2001, recorded in July.

Last month, the Government lowered its 2008 growth target from a range of 4-6 per cent to 4-5 per cent, citing weakness in the global economy.

The MAS said statistical analysis of the Aug 11 survey sent to 24 private sector economists, of whom 20 responded, suggested growth was likely to come in this year at between 4 and 4.9 per cent.

Economists foresee more gloom ahead, with several likely to cut their growth forecasts in the coming weeks.

CIMB-GK economist Song Seng Wun told The Straits Times: ‘The 4.2 per cent figure is still surprisingly high. The survey results are a little too optimistic, given the poor July factory output figures and downgrading of forecasts by most OECD (major industrialised) countries.’

Mr Song, who is tipping 3.5 per cent growth, expects the forecast to dive by about one percentage point in the year-end MAS survey as optimism dims.

Economists have also cut their forecast for third-quarter growth from 3.7 per cent to 2.7 per cent. Inflation is tipped to hit 6.4 per cent this year, up from the 6 per cent forecast earlier. Unemployment is expected to rise to 2.5 per cent, higher than the 2.2 per cent in the June poll.

Standard Chartered Bank economist Alvin Liew, who expects 3.5 per cent growth this year, believes manufacturing weakness will lead the economy into a technical recession - two consecutive quarters of negative growth.

He said: ‘The high bases built up in 2007 for many of the star industries like the financial sector, marine engineering and construction are unlikely to offer sufficient offset to the manufacturing sector’s slowing momentum.’

He added that the potential benefits of the F1 Grand Prix race this month is untested and ‘unlikely to give that much boost to retail sales’. The construction sector’s boom is ‘too small to make a big difference’ as it makes up about 4 per cent of economic output.

But all is not gloom and doom. HSBC economist Robert Prior-Wandesforde said: ‘The fundamentals for domestic growth remain extremely good - low interest rates, a very accommodative fiscal policy, double-digit job growth and strong gains in HDB flat prices.’

He expects 5.8 per cent growth, but says he will cut this in coming weeks.

One bright spot was a 15 per cent surge in overall spending at home year-on-year in the second quarter, thanks mainly to a 25 per cent rise in investment, he said.

Residents air dorm fears to their MPs

Source : Straits Times - 4 Sep 2008

Serangoon Gardens folk get assurance their worries will be looked into

For some time now, Serangoon Gardens resident Kelvin - he did not want his full name used - has been trying to find housing for his firm’s foreign workers, with little luck.

So when he found out that the former Serangoon Gardens Technical School might be converted into a foreign worker dormitory, the 38-year-old, who is in the construction business, went into a tizzy.

The reason: The proposed dorm is next to his home, and there is no way, he says, he is willing to accept ‘half-naked men’ sitting in his neck of the woods.

Last night, Kelvin and about 250 other indignant residents of the firmly middle-class neighbourhood trudged through the rain to make their views known to their Members of Parliament from Aljunied GRC, Mr George Yeo and Ms Lim Hwee Hua.

At a two-hour dialogue, held under a marquee at a park along Chartwell Drive, the residents listed their objections to the proposed move, with some barely able to disguise their anger over it.

Their key worries: Security, traffic congestion caused by vehicles which will ferry the foreign workers to their worksites, and insufficient infrastructure in the area to support over 1,000 new residents.

Madam Lim Chor Yeow, 71, a retired teacher, echoed a view of many when she asked: ‘If we have workers coming in here, is it safe for old people?’

Administrative manager Rose Koh, 52, said she would worry about leaving her ageing mother and two young children at home when she left for work.

Others said parks might be overrun by foreign workers. As would buses.

One resident, Mr E.T. Mohan Dass, 60, a programme manager, feared that as foreign workers flood in, the estate’s value would go south.

Assuming there were 1,400 households, each worth $1 million, in the estate, he said ‘even a 1 per cent drop in asset value (because of the workers’ presence) would mean a $14-million loss’. Another, Ms L.S. Lim, 70, urged the authorities to ‘think of Singaporeans first’.

Feelings against the dorm plan run high in the estate: A petition against the idea has been started by residents, and has been signed by about 1,400 households so far. There are about 7,000 households in the area.

After hearing their complaints and trying to temper some of their concerns, Mr Yeo and Mrs Lim said they would pass the feedback and petition to the Ministry of National Development.

At the meeting, Mr Yeo said he could understand the residents’ position, adding that Serangoon Gardens is a place where ‘people feel a lot for the heritage, and we should not upset that’.

But he also asked them not to cast aspersions on foreign workers, as they have ‘come to Singapore, and benefit Singapore’. Mrs Lim added that residents’ security will be taken into account in the plan.

However, after the dialogue, she admitted to reporters that those living in the estate should have been informed about the plan first-hand, instead of having to read about it in newspapers or get the news from neighbours.

She added that she has been in touch with MND, and is trying to ‘bring home the points, the valid concerns that residents have to the minister…’

Mr Yeo also told residents: ‘We are not just postmen and women transmitting your views. URA and MND have the final decision, but I assure you we are not doing nothing.’