Wednesday, September 17, 2008

Odds Of Below 4% S'pore Growth Now 'More Than 50%'

Source : The Business Times, September 17, 2008

The odds on Singapore's economic growth slowing to less than 4 per cent this year are now more than 50 per cent, says economist Choy Keen Meng of Nanyang Technological University (NTU).

Responding to questions from the media, Dr Choy said there is now five or six in 10 chances of that happening, after the latest upheaval in the financial markets.

'However, there are still lots of imponderables,' he said. 'Much depends on how the US Fed reacts to the latest crisis, and its impact on consumer sentiment.'

Dr Choy was speaking at a briefing on the latest set of macroeconomic forecasts from NTU's Economic Growth Centre (EGC).

EGC's official prediction puts Singapore's GDP growth this year at 4 per cent, which is consistent with the 4-5 per cent range given by the Government.

But EGC's forecast does not take into account the spillover effect from the latest news of Lehman Brothers' collapse and Merrill Lynch's sale to Bank of America, amid a deepening credit crisis.

On Monday, 158-year-old Lehman filed for bankruptcy protection under a massive weight of debt, while Merrill Lynch agreed to be taken over by Bank of America.

For the current quarter, NTU projects growth of 1.9 per cent, followed by a rebound to 4.9 per cent in Q4. Its GDP growth estimate next year is 4.2 per cent, suggesting a quick economic rebound appears unlikely.

At sectoral level, manufacturing is expected to contract 4.2 per cent before recovering to grow 1.3 per cent in the final quarter of this year.

'The writing was already on the wall when we look at the non-oil domestic exports (NODX) and factory output figures in July. Both were in negative territory,' said Dr Choy.

Singapore's NODX shrank 5.7 per cent in July, while factory output contracted a drastic 21.9 per cent.

Surprisingly, global chip sales have been affected little by the economic slowdown so far, as seen from the 5.3 per cent and 8 per cent sales growth in Q1 and Q2. But even though economists forecast 10.5 per cent and 12.4 per cent growth in Q3 and Q4, there are signs that a slowdown could happen as early as the first quarter of 2009.

Using the Electronics Leading Index - an EGC in-house index - as a guide, Dr Choy said a slowdown could hit in six to nine months, even though chip sales could post a recovery in the second half of next year.

Construction activity here is expected to grow at a slower 15.1 per cent this quarter and 8.8 per cent next quarter - down from 17.4 per cent in Q2, while services sector growth is projected at 4.8 per cent and 7.3 per cent this quarter and the next.

Commenting on the Formula One race here, Dr Choy said the event could fail to generate greater interest, partly due to the sluggish economic environment. But in the long term, events like F1 should bode well for tourism, he said.

Still, all is not gloom and doom. The economists expect consumer price index (CPI) growth to come down to 6.7 per cent in Q3 and 6 per cent in Q4, from 7.4 per cent in Q2. As the effect of the high energy and food prices wear off, next year's CPI growth could moderate to 3 per cent.

On labour market conditions, economist Randolph Tan sees continuing strength in that segment, citing strong wage growth and job creation in construction and services.

The unemployment rate is projected to remain stable at 2.3 per cent this year, but employment growth could drop to 51,000 and 41,000 in Q3 and Q4 respectively - down from 71,400 in Q2 this year.

Exec Condo Site Released For Sale In Punggol

Source : The Straits Times, Sep 17, 2008

A NEW executive condominium (EC) site in Punggol has been released for sale by the Housing Board.

A development of about 16 storeys and with about 600 apartments can be built on the plot at the junction of Punggol Field and Punggol Road, HDB said.

The 99-year leasehold site is 242,159 sq ft in size and has a potential gross floor area of 726,477 sq ft.

Property consultants expect lukewarm response from developers despite the site's attractive location near the Punggol MRT Station, Cove LRT Station and the future Punggol Town Centre.

The recent financial catastrophes in the United States might further dampen sentiment in the Singapore housing market, said Mr Nicholas Mak, director of research and consultancy at Knight Frank, who predicts fewer than five bids.

Mr Mak thinks the site can fetch $73 million to $87 million, or $100 to $120 per sq ft (psf) of gross floor area. Finished units could be launched at $500 to $550 psf, based on recent home sales in the area.

This is the fourth EC site the Government has put on the market this year and the only one that is being released under the confirmed list.

This means it is going on sale regardless of buyer interest.

The other three sites made available this year - in Jurong West Street 42, Yishun Avenue 11 and Sengkang East Avenue - were put on the reserve list, so they will be launched for sale only if developers agree to bid a minimum sum.

So far, no interest has been expressed in these three EC sites.

HDB last year tried to make ECs more attractive to potential home buyers by relaxing the rules for applications.

Ninety per cent of the units in a new EC will be set aside for first-timers during the first month of sales. First-time buyers are eligible if they have household incomes of up to $10,000.

The tender for the Punggol site will close on Nov 11.

Fallout In Singapore: A Tighter Job Market And Lower Asset Prices

Source : The Straits Times, Sep 17, 2008

SINGAPORE and the region will not escape the financial tsunami sweeping through Wall Street, according to local economists.

They told The Straits Times yesterday that the man on the street will feel the fallout from the credit crisis in the form of a tighter jobs market, sinking asset prices and shrinking corporate bottom lines.

Singapore's growth will probably also be affected. Exports are likely to take a further hit and the domestic economy will experience a slowdown.

However, the economists added that the situation unfolding now is not as severe as during the Asian financial crisis of the late 1990s.

Citigroup's Kit Wei Zheng said the storm in the US will 'increase the risk on the export front', leading to 'a broadening of the slowdown into the domestic economy'.

'First to be hit will be the export-oriented sectors such as manufacturing, and the externally-oriented sectors, like tourism. The slowdown will also filter through to affect domestic demand.'

OCBC Bank economist Selena Ling said: 'It's a confidence crisis more than anything else. The biggest question now is, who's next in line?'

The economists pointed to the way this week's dramatic events could reach down to affect the man on the street.

Consumers are likely to tighten their belts and cut spending and investment in light of plunging equity markets.

That will mean corporate bottom lines will be dampened, and firms will in turn be more cautious about expansion, resulting in fewer jobs created.

These are likely to be accompanied by falling property prices, leaner bonuses and smaller salary increases.

Banks will also turn more defensive, limiting loans for cars, homes or business expansion.

The economists noted that the impact of a giant insurer such as AIG going under would be greater than that of an investment bank like Lehman Brothers.

Ms Ling said: 'That's because insurance cuts across both companies and consumers. If an insurer goes under, consumers will be affected via auto, personal policies. It'll have a greater economic impact.'

Nanyang Technological University economist Choy Keen Meng said the maelstrom will result in fewer jobs for the financial sector.

But he added: 'I don't think the deterioration will be substantial...I don't think we're anywhere close to the 2001 recession scenario...unless the whole world goes into a recession.'

Other economists also aired the view that the crisis is nowhere near as bad as during the Asian financial meltdown.

Mr Kit said: 'Asia's not at the epicentre of this crisis, so I don't think it'll be that severe. The region has restructured and is more resilient. We're not looking at a meltdown.

'But what it'll mean is that the slowdown in Singapore will be a lot more painful than what people were expecting at the start of the year.'

Ms Ling added: 'Asia's still growing now - that's the key distinction as compared to the previous period. The crisis is more concentrated in the US, and is spreading to Europe and Japan.'

And economists are not all scampering to trim their 2008 growth forecasts in the wake of Wall Street's mayhem.

Standard Chartered Bank's Alvin Liew said: 'We are still fairly comfortable with keeping our full-year 3.5 per cent forecast unless the third-quarter prelim GDP growth turns out much worse than the 0.4 per cent year-on-year projection we made.'

But not everyone is as optimistic.

Mr Kit said: 'The current situation reaffirms our bearish view over the next 12-18 months. The 4-5 per cent Government growth forecast range may not be realistic any more, and growth could fall under 3 per cent this year and the next.'

Marina Bay All Set To Sparkle

Source : The Straits Times, Sep 17, 2008

Plans for two promenades unveiled which will complete waterfront loop, linking bay attractions

PLANS for the last two links of the Marina Bay chain have been laid down, completing a 3.5km waterfront loop joining up the necklace of attractions in the bay area.

They are:

# An 800m water-misted stretch along Bayfront, adjacent to Bayfront Avenue.

# A 400m shady walk through pavilions under large solar-powered fans along Marina Boulevard.

The links were announced by the Urban Redevelopment Authority (URA) yesterday.

The uninterrupted waterfront promenade designed by Australian architects Cox Group in collaboration with local firm Architects 61, will cost $35 million to build.

When ready around the end of next year, visitors will be able to walk a loop linking the Merlion Park, Esplanade Theatres, the ArtScience museum and integrated resort (IR), Marina Bay Financial Centre and The Fullerton Heritage.

Ultimately, the plan is to create a vibrant waterfront area, drawing visitors to shop, eat, play or simply take in the view of the bay from any spot on the promenade.

The Bayfront stretch will be a two-tier promenade with a granite-paved upper-level and a lower-level timber boardwalk to allow visitors to go right down to the water's edge.

The main attraction is a 300m-long stainless steel tube-like structure, which can be as high as 10m, equipped with audio speakers, night-lighting and spray misters to bring temperatures down a notch.

The promenade will widen at the southern corner of the Bay into an open space with water features such as dancing water jets. Next to that will be a visitor centre showing developments in the area, a cafe and an information booth.

The lively, pumping ambience of the Bayfront stretch will give way to a shadier, more tranquil gander along Marina Boulevard.

There, visitors can rest their feet and sit on the seawall among flowering shrubs and shady trees, and be cooled by solar-powered fans.

The announcement for the final two links has come 18 months after URA unveiled its plans for the first, a double-helix bridge linking the IR site with the Singapore Flyer ferris wheel. The Flyer opened officially in March, and the bridge will be up around the end of next year.

Said URA's chief planner Koh-Lim Wen Gin: 'These constructions help us to take full advantage of the waterfront. It allows people to enjoy this reservoir in the heart of our city and allows lots of events to take place next to and on the water.'

The URA is now calling for tenders for the promenades' construction.

The Marina Bay loop will be part of a longer 11.7km waterfront route around the Marina Reservoir, linking the Gardens by the Bay, the Marina Barrage and the new Sports Hub. These are in the midst of construction.

The designer, renowned Australian architect Philip Cox, hailed the Marina Bay area as the 'new focus of the city' and a way for Singapore to become 'the most successful maritime city in the world'.

He said: 'Every part of Singapore offers a different experience. This one will lead to a

refocus, a shift of the centre of the city to this area and away from Orchard Road.'

$35m For Marina Bay Waterfront Promenade

Source : The Business Times, September 17, 2008

THE government will spend $35 million to complete the 3.5 km waterfront promenade around Marina Bay, said the Urban Redevelopment Authority (URA).

On the boardwalk: The Marina Bay Sands stretch will have a two-tier promenade. The lower level will have water-taxi landing points and berthing points for boats

To date, stretches along The Esplanade are already accessible to the public with work underway at One Fullerton to make the promenade there more pedestrian-friendly.

The URA said development will now turn to the waterfront promenade along Marina Bay Sands, Marina Bay Financial Centre, and the Central Promontory site. Completion is targeted for around end-2009.

The design, by Australia's Cox Group, will include a new eco-friendly visitor centre.

The Cox Group also designed the double helix pedestrian bridge linking Bayfront to Marina Centre where the Art Park is also sited.

At a press briefing held yesterday, URA revealed details of the promenade design and this includes plans for the Central Promontory site to be used as an interim event space and public space during national events such as the Marina Bay Countdown.

Currently, it is hosting the Singapore Biennale's Containart Pavilion, designed by Shigeru Ban.

URA also said it will continue to work with other agencies and stakeholders to programme activities on the site.

Another design feature of the Cox Group scheme is a two-tier promenade along the Marina Bay Sands stretch. This part of the promenade will have a granite-paved upper level promenade and a lower level timber boardwalk with water-taxi landing points and berthing points for boats incorporated.

The lower level boardwalk will include tiered seating and steps that will go down to the water's edge and double as seats for watching events at the bay.

Other design features include interactive misters programmed using a system of sensors that monitor ambient temperature, humidity and movement.

There will also be water jets and specially designed 'breeze shelters' that will feature solar-powered fans.

When completed, the 3.5 km waterfront promenade will form part of the longer 11.7 km waterfront route around Marina Reservoir, which will link the Gardens by the Bay, the Marina Barrage and the new Sports Hub.

To date, the government has pumped in more than $4.5 billion to facilitate development of Marina Bay. This includes building the common services tunnel as well as the Marina Barrage.

Growth May Fall Below 4%

Source : The Straits Times, Sep 17, 2008

Shocks in financial markets make prospect increasingly likely

THE dramatic events in financial markets this week have made it more likely that Singapore's growth may fall below 4per cent this year, according to economist Choy Keen Meng.

Dr Choy, the lead economist for macroeconomic forecasting at the Economic Growth Centre (ECG), said yesterday that there was a more than 50 per cent chance that expansion would fall below 4 per cent.

He said a team of economists recently predicted gross domestic product growth to come in at 4 per cent - in line with the Government's 4 per cent to 5 per cent forecast.

This forecast, however, was before Monday's stunning demise of two of Wall Street's largest investment banks, Lehman Brothers and Merrill Lynch.

Dr Choy said the spillover could spread to the world economy should the credit crunch worsen and consumers and investors become even more bearish.

With a global economic slowdown in train, the ECG predicts that growth for the July-September quarter will come in at just 1.9 per cent. It will rise in the following three months to 4.9 per cent on the back of an improved performance in the manufacturing and services sectors.

A rapid pickup next year, however, is unlikely, with growth expected to come in at a conservative 4.2 per cent for the year.

The manufacturing sector is expected to contract by 4.2 per cent this quarter - less than the 5.2 per cent contraction in the second quarter - and grow by 1.3 per cent in the fourth quarter.

One reason for the pickup in factory output is the growth in the electronics sector, a key component of manufacturing, which is expected to expand to 10.5 per cent this quarter.

There are, however, worrying signs that this may not be sustained.

The Electronics Leading Index, a forward-looking indicator of electronics demand, shows that the chip sector may be due for a contraction. Structural changes have led to a loss of competitiveness among chipmakers here.

Construction is expected to moderate to 8.8 per cent in the fourth quarter from this quarter's expected 15.1 per cent growth as the property market cools.

Expansion in the services sector is expected to decelerate to 4.8 per cent this quarter but recover to 7.3 per cent the following quarter, even as domestic demand weakens and tourism numbers shrink due to the slowdown.

Dr Choy said the Formula One race two weeks from now might not attract as many tourists as hoped for.

Inflation, at least, seems to be retreating. Prices may have peaked, as forecasts show that inflation is expected to come down next year to 3 per cent from 6.7 per cent this year. This suggests that the Government will now turn its focus away from combating high prices to encouraging growth.

Dr Choy suggested that a fiscal stimulus package from the Government would be useful to boost growth.

The labour market is expected to be quite robust despite the economic situation. About 51,000 jobs are expected to be created this quarter and 41,000 in the fourth quarter - well under the 71,400 jobs added in the second quarter.

Unemployment is expected to remain at between 2.3 per cent and 2.4 per cent for the rest of the year.


A rapid pickup next year is unlikely, with growth expected to come in at a conservative 4.2 per cent for the year.