Singapore, the wealthiest country in South East Asia, has officially slumped into a technical recession, making it the first country in Asia to be hit by recession.
The biggest blame was put on the continued falling demand of its export products from the US and the Europe, mainly the consumer electronics and high tech manufacturing products.
Manufacturing and export are two of Singapore’s key economy drivers, and accounts for more than a quarter of the country’s GDP. Its once thriving pharmaceutical industry is also not looking good, becoming one of the mostly hit casualties in the decline of the manufacturing business. Analysts are expecting an exodus of job cuts and layoffs, with foreign workers to become the first batch of victims.
With the weakening of the US, European and Japanese economies continue, the future does not look too good.
Last month, the Monetary Authority of Singapore (the central bank) announced a financial deregulation plan, which, among others, allows more foreign banks to open up their operation in the country. This has immediately put Singapore’s 5 major banks at risk as there are now engaged with takeover and acquisition bids.
A technical recession refers to two continous quarters of negative GDP growth. Singapore’s GDP contracted by 5.7% in the second quarter, followed by another shrink of 6.3% in the third quarter.