The latest data from Singapore's government shows that the economy is still in contraction mode. First quarter GDP shrank by 10.1% vs. a year ago.
The seasonally adjusted unemployment rate was just 3.3%. This figure is artificially kept low by the government due to the many incentives offered to private employers to keep workers on the payroll and offer training programs. As 60% of the GDP is directly related to exports (Source: Singapore’s Economy Begins to Stir), Singapore’s economy is severely affected by the current recession. Global trade has slowed and especially exports from Asia to the West have fallen significantly.
A Few Observations
Singapore Port - Total Traffic in May 39,318 compared to 40,207.5 ( in 000s tons) in April. Last year in May it was 45,893 tons. Container traffic tonnage remained almost the same in May from the previous month but oil shipments were down slightly.
Total exports in the first quarter were down 26% relative to the same period last year.
Despite the fall in global trade, Singapore will weather this recession better than most due to sound policies implemented by the city state. Singapore’s banks were not heavily exposed to the subprime mess and balance sheets remain strong. The country does not have a foreclosure problem as default rates are very low. In addition, savings rates are high and the real estate market is stable.
A simple way to invest in Singapore is through the iShares MSCI Singapore Index Fund (EWS).