Tea Leaves Of The Economy: General Elections In 2010?
Although the economic fundamentals suggest otherwise, it appears that the worst global economic downturn of 2008-2009 (dubbed the 'Great Recession') since the Great Depression has come and gone swiftly.
The imperative to institute deep-seated regulatory reforms in the advanced economies, especially in the United States of America, seems to be losing momentum and political urgency. In turn, this raises questions of whether Wall Street, governments, and regulators alike have learned the needed lessons to avoid another systemic financial meltdown.
It remains to be seen if the current rebound is a prelude to a sustained recovery, or a way station to a new nightmare scenario where the loss of trust becomes even more endemic.
Nonetheless, in tandem with global efforts to stoke a recovery and rising domestic market expectations, Singapore's economic rebound has been impressively strong in the third quarter of 2009. Indications are that the fourth quarter results will be encouraging, if not better than 3Q 2009.The deep concerns expressed just over a year ago now seem over-stated - witness the apparent over-exuberant residential property market and stock market. These speculative excesses point to the risk of asset bubbles forming. That in itself carries political and economic risks if the asset price bubbles are not supported by strong economic fundamentals.
Economic hubris combined with arrogance and ignorance of economic realities and frailties is a lethal cocktail for all of us. We need to be mindful that the popular mantra of economic forecasters and market bulls, "the deeper the recession, the quicker the recovery" may not hold true. A sharp recovery worldwide is not a foregone conclusion.
To be sure, the Singapore government's decisive and resolute efforts to manage the downturn, primarily through keeping workers employed and the large fiscal stimulus package, have been essential in the quick turn-around. The strong tripartite partnership and solidarity has also been credited for the head-on resoluteness with which the government, businesses and workers collectively tackled the challenges in the past year, and lay the foundation for the recovery.
In November 2009, Minister Mentor Lee Kuan Yew said that Singapore could expect 3 per cent economic growth in 2010, compared with the likely minus 2.5 to 2 per cent contraction for 2009. The International Monetary Fund is relatively more optimistic, projecting Singapore's economic growth at 4.3 per cent in 2010. Some local economists expect growth to be between 5 and 6.5 per cent in 2010.
