Singapore lowers economic growth forecast to -2.0%

Singapore lowers economic growth forecast to -2.0%

SINGAPORE: The Singapore economy is expected to grow between -2.0 per cent and 1.0 per cent in 2009. The forecast by the Trade and Industry Ministry (MTI) is lower than the -1.0 per cent to 2.0 per cent range forecast in November 2008.

The weaker prognosis for the Singapore economy in 2009 is based on the sharp contraction seen in the fourth quarter of 2008.

Advance estimates show that Singpore’s gross domestic product (GDP) for 2008 should come in at 1.5% compared with 7.7 per cent in 2007.

This figure is lower than MTI’s forecast of around 2.5 per cent in November 2008 and is attributed to a fourth quarter contraction of 2.6 per cent in real terms over the same period in 2007. This follows a decline of 0.3 per cent in the preceding quarter.

On a seasonally adjusted, annualised quarter-on-quarter basis, MTI said real GDP fell by 12.5 per cent, compared to a decline of 5.4 per cent in the third quarter of 2008.

-CNA/sf

Source : Channel NewsAsia - 02 Jan 2009

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Singapore economy may slide two percent: govt

Singapore economy may slide two percent: govt

SINGAPORE: Singapore’s economy could contract by as much as two percent this year, the government said Friday after data showed a deepening recession in the trade-dependent economy.

The forecast marks a downgrade from the government’s previous estimate, made in November, which ranged between a contraction of 1.0 percent and expansion of 2.0 percent in 2009.

“The global economic crisis has worsened since November, with sharp declines in global demand, trade and investments,” the Ministry of Trade and Industry said in a news release.

It also cited a sharp fourth-quarter contraction in the Singapore economy for the weaker forecast.

The Trade and Industry Ministry cited a World Bank which points to a global trade volume decline by 2.1 per cent in 2009, the first contraction in 26 years and analysts who have shaded down their growth forecast for the US, Europe and Japan by about one percentage point.

It also took into account the growth outlook for the regional economies which has also deteriorated, with more economies now expected to register negative or flat growth next year.

These developments said MTI will affect the sectors in the Singapore economy that rely on the movement of goods and services in the region, such as the wholesale & retail sector and the transport & storage sector.

Manufacturing will be weighed down by falling demand in the developed economies, while financial services will see a sharp slowdown reflecting weak financial markets and credit growth.

“The slowdown in these sectors will spread to the domestically-oriented segments of the economy, such as property, retail, and business services” said the ministry in its news release.

The weaker prognosis for the Singapore economy in 2009 is also based on the sharp contraction seen in the fourth quarter of 2008 where advance estimates based largely on data from October and November, point to a fourth quarter gross domestic product (GDP) contraction by 2.6 per cent in real terms over the same period in 2007.

On a seasonally adjusted, annualised quarter-on-quarter basis, real GDP fell by 12.5 per cent, compared to a decline of 5.4 per cent in the third quarter of 2008.

The MTI announcement said the manufacturing sector declined by 9.0 per cent compared to the same period in 2007, mainly because of a sharp drop in the output of electronics and precision engineering and the continued weakness in global demand for electronics products.

Chemicals output also fell during the quarter as a result of slowing external demand, as well as temporary plant maintenance shutdowns.

Biomedical manufacturing output was also lower, reflecting the production of pharmaceutical ingredients with lower values compared to same period in 2007.

The services producing industries are estimated to have grown by 1.1 per cent in the fourth quarter, slowing down from a 5.3 per cent increase in the third quarter.

The collapse in world trade severely impacted wholesale trade and transport and storage.

Growth in financial services weakened on the back of declines in trading activities in foreign exchange and stock brokerage, fund management, and Asian Currency Unit (ACU) business.

The construction sector grew by 13.3 per cent in the fourth quarter of 2008, slower than the growth of 18.6 per cent in the preceding quarter. Construction output was mainly weighed down by a contraction in industrial building and private housing activity.

For 2008 as a whole, the economy is estimated to have grown by 1.5 per cent, compared with 7.7 per cent in 2007.

This figure is lower than MTI’s forecast of around 2.5 per cent in November 2008.

The manufacturing sector is estimated to have contracted by 3.7 per cent, down from an expansion of 5.8 per cent in 2007.

The services producing industries and construction sector are also expected to register slower rates of growth compared to 2007, at 5.3 per cent and 17.3 per cent respectively in 2008.

-AFP/CNA/sf

Source : Channel NewsAsia - 02 Jan 2009

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Hu, Bush hail 30 years of Sino-US ties

Hu, Bush hail 30 years of Sino-US ties

Both call for greater bilateral cooperation to face the challenges ahead

BEIJING: Chinese President Hu Jintao yesterday called for strengthened cooperation and even closer relations with the United States as the two countries marked the 30th anniversary of their diplomatic ties.
Thousands of peace doves were released in Beijing’s Tiananmen Square at dawn yesterday, as the Chinese flag was raised for the first morning of 2009.

The US switched diplomatic recognition from Kuomintang-controlled Taiwan to communist China on Jan1, 1979.

In a congratulatory message to his US counterpart, President George W. Bush, Mr Hu called the establishment of formal Sino-US ties - one of the world’s most crucial diplomatic relationships - a key moment in world history.

He added that Beijing was eager to work with Washington in facing today’s global challenges.

Official bilateral ties ‘not only brought tremendous welfare to the people of the two countries, but also made great contributions to peace, stability and development in Asia and the world’, Mr Hu said, according to the state-run Xinhua news agency.

The US’ switch of its diplomatic recognition to communist-ruled China 30 years ago ended decades of close support for the Kuomintang (KMT) government of Taiwan.

The KMT fled to Taiwan from mainland China in 1949 after losing a civil war.

‘Thirty years ago, China and the United States established diplomatic relations, a significant milestone in the two countries’ history that opened a new page in relations and left a far-reaching impact on the world situation,’ Mr Hu said in his message to Mr Bush.

The Chinese leader vowed to ‘push the Sino-US constructive and cooperative partnership to greater depth in a healthy and stable manner’.

‘In a time of deep and complex world change, China is willing to join with the United States in facing new opportunities and challenges,’ he said.

Xinhua quoted Mr Bush as saying in his message that China and the US had in the past 30 years ‘transcended deep cultural and political differences, bridging a wide gulf’.

The US leader also called for greater bilateral cooperation, it said.

The messages came as Xinhua ran a separate commentary noting improving ties and calling for the two sides to join forces in addressing the global economic crisis.

The Chinese embassy in Washington issued a statement praising the Strategic Economic Dialogue, which allowed the two sides to meet regularly during the Bush administration to discuss issues.

Incoming president Barack Obama has not indicated whether or in what form those meetings will continue.

Sino-US ties have improved dramatically from their Cold War nadir, especially in trade.

Yet numerous sore points remain, including continued US military help for Taiwan, recurring disputes over trade practices, China’s human rights record and American suspicions over Beijing’s military modernisation.

The Xinhua commentary noted relations had not always been smooth and urged both sides to ‘really cherish’ recent developments in relations.

Neither Mr Hu nor the Xinhua commentary made mention of what China expects from Mr Obama.

At the height of presidential campaigning last year, Mr Obama accused China of manipulating its currency and called for Beijing to change its foreign exchange policies to rely less on exports and more on domestic demand for growth.

The yuan’s value has been one of the particularly sensitive issues between China and the US, which has accused Beijing of deliberately keeping its currency low to protect the competitiveness of Chinese export prices.

Some observers said the global economic crisis may be the biggest strain yet on the web of ties the two major global players have created.

Analysts say a more aggressive US stance, particularly on trade, risks testing delicate relations amid rapidly rising unemployment and a gloomy economic outlook in both countries.

In China, where unemployment is rising amid the global economic crisis, short cuts to help Chinese products compete abroad, like subsidies and tax reductions, look increasingly attractive.

In his New Year address broadcast late on Wednesday, Mr Hu called for international cooperation to combat the financial meltdown.

But officially, Washington trusts that mutual self-interest will keep either side from lashing out, said US Ambassador to China Clark Randt.

‘The Chinese have understood clearly that they are our biggest creditor,’ said Mr Randt, referring to vast US debt accumulated in China’s coffers after years of trade surpluses.

‘They are rooting for us; they hold a lot of dollars and they understand that we are in the same boat. If our economy is in trouble, they are in trouble.’

REUTERS, AGENCE FRANCE-PRESSE

Source : Straits Times - 02 Jan 2009

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US hands Green Zone security over to Iraq

US hands Green Zone security over to Iraq

US and Iraqi soldiers (left) shake hands after the ceremony in which Iraqi forces took control of the Joint Security Station in Ghazzaliyah, Baghdad yesterday. — PHOTO: ASSOCIATED PRESS

BAGHDAD: The American military in Iraq came under Iraqi authority yesterday for the first time since the US-led invasion ousted Saddam Hussein in 2003, a milestone in the war-weary country’s path to restoring sovereignty.
The US force in Iraq, now more than 140,000 strong, had operated since 2003 under a United Nations Security Council resolution which expired at midnight on New Year’s Eve.

As of Jan 1, troops will now operate with authority granted by the Iraqi government in a pact agreed by Washington and Baghdad.

In another step towards sovereignty, Iraq was yesterday also handed control of Basra airport by British forces, who have been using the facility as their main military base in southern Iraq since the 2003 war.

The transfer of authority was formalised in a ceremony which saw the US hand over security control of the heavily fortified Green Zone, symbol of the American occupation, to Iraq.

At the ceremony at the former palace of ousted dictator Saddam Hussein, Iraqi Prime Minister Nuri al-Maliki said: ‘A year before it was just a dream to think about foreign troops withdrawing from Iraq but today that dream has become a reality.’

As the Iraqi flag was hoisted at the entrance to the sandstone palace in central Baghdad, he added: ‘The palace is the sign of Iraqi sovereignty and it is a message to all Iraqis that our sovereignty has returned.’

He proposed that Jan 1 be declared a national holiday to commemorate what he called ‘Sovereignty Day’.

Under the terms of an agreement signed with Washington in November, US troops officially decamped from the 14.5sq km Green Zone located on the banks of the Tigris in central Baghdad.

However, US troops will continue to play an advisory role to the Iraqi military.

The pact gives US troops three years to leave the country, revokes their power to detain Iraqis without an Iraqi warrant, and subjects contractors and off-duty American troops to Iraqi law.

‘The role of the coalition forces (in the Green Zone) will be secondary, centred on training Baghdad brigade troops to use equipment to detect explosives and advising Iraqi forces,’ said Mr Qassim Moussawi, spokesman of Iraqi forces in Baghdad.

American troops across Iraq remain under US command but their operations must be authorised by a joint US-Iraqi committee.

They are to leave the streets of Iraqi towns and cities by the middle of this year and withdraw from the country by the end of 2011.

Other US-allied troops, including 4,100 from Britain, are to leave Iraq within seven months.

On Wednesday, US officials finished vacating the palace in the centre of the Green Zone that had been the seat of US power in Iraq since 2003.

Some 15,000 prisoners held at US military detention camps must now be charged with crimes under Iraqi law or, according to the security pact, gradually let go.

Iraqi forces take over a dramatically different country from the one ravaged by sectarian violence in 2006 and 2007.

Attacks have dropped sharply, thanks partly to an increase of troops ordered by President George W. Bush in 2007 and also to newfound cooperation from Sunni Arab tribal leaders.

Militants continue to strike, especially with bomb attacks that frequently target civilians.

According to official health ministry figures, 5,379 civilians were killed last year, less than a third of the 16,232 killed in 2007 but still an average of nearly 15 a day.

This month will see provincial elections that US and Iraqi officials bill as a milestone towards democracy.

But Iraq remains deeply scarred by the war. Baghdad neighbourhoods are divided by checkpoints and concrete walls, and millions of people who fled the violence have yet to return home.

REUTERS, ASSOCIATED PRESS, AGENCE FRANCE-PRESSE

Source : Straits Times - 02 Jan 2009

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New Year fire razes Bangkok nightclub; at least 60 dead

New Year fire razes Bangkok nightclub; at least 60 dead

One S’porean killed; two others among over 200 people injured in blaze

Fire and rescue officials removing a victim yesterday following a fire at the Santika nightclub in Bangkok. The fire swept through the upmarket nightspot jammed with hundreds of New Year partygoers killing at least 60 people, one of them a Singaporean, and injuring more than 200. — PHOTO: ASSOCIATED PRESS

BANGKOK: At least 60 people, including a Singaporean, were killed in a fire which swept through a packed nightclub here shortly after hundreds of revellers ushered in the new year.
Mr Teo Sze Siong, 38, an air traffic controller, was one of those who died in the inferno that gutted the upscale Santika club. Victims died from burns, smoke inhalation and injuries suffered during a stampede from the club, police said.

Two other Singaporeans, 21-year-old national serviceman Melvin Lee and a woman, Ms Adeline Tok Chai Lin, were among over 200 people injured in the blaze, according to information obtained from Bangkok police. About 30 of the injured were foreigners.

It is not known at present how many people were in the two-storey club but the place was reportedly filled to its capacity of 1,000 when the fire started shortly after midnight.

The flames raced through the premises, engulfing it in about 10 minutes.

Yesterday, inside the cordoned-off venue, abandoned shoes and broken bottles littered the floor, testament to the panic inside hours earlier.

Outside, about 100 people gathered, desperate for news of their loved ones.

While police investigators sifted through the charred remains of the club for clues, eyewitnesses blamed a fireworks display as the cause of the disaster.

Ominously, the countdown party was named ‘Goodbye Santika’ and was tagged with an icon of a flame on the club’s website.

Survivors said the pyrotechnics show came on right after the new year countdown.

Sparks from the fireworks fell onto the carpeted floor, setting it aflame. The ceiling, which is made of soundproofing material, also caught fire.

‘At first, I thought it was a special effect, which looked like (the) real thing. Then, someone shouted ‘fire, fire’ and panic broke out and people ran for their life,’ said one eyewitness.

As revellers scrambled for the exits in the dark, the electricity went out.

‘Everybody was pushing against each other trying to get out to the front door as quickly as possible. I saw people, particularly young girls, being pushed away and crushed underneath as others were stomping on them trying to get out,’ said Mr Sompong Tritaweelap, who lives in an apartment behind the nightclub.

‘People were screaming for help from every window. It was a terrible sight. Their hair and clothes were on fire but there was nothing they could do as the fire engulfed them.’

Firefighters soon arrived, but flames were racing through the entire building even as the rescue operation was going on. It took two hours to bring the blaze under control.

Almost all the dead were on the ground floor, where the stage was located.

Fire brigade officials said the death toll was high because there were few exits and the windows on the upper floors had iron bars across them. Other victims were trapped in the basement of the club.

Thai television showed firemen counting bodies swaddled in white cloth, as rescuers helped bloodied and bandaged revellers.

Police Lieutenant-Colonel Sujettana Sotthibandhu, a forensics expert, said it might take about a week to identify almost 30 badly burnt bodies.

Santika, located in the Thai capital’s Ekkamai district, is popular with tourists and Bangkok’s elite. One website about Bangkok’s entertainment scene described the club as attracting ‘an affluent Thai student crowd, with Euro models and Westerners also popping in’.

According to the Thai News Agency, police said Santika was registered under the name of Mr Visook Setsawasdi, who was also injured in the blaze.

In cyberspace, there were heated discussions about Santika’s inadequate emergency procedures. Many also left angry tirades on the club’s own message board, blasting its administration for the disaster.

Mr Teo was apparently in the Thai capital to attend a wedding, relatives told The Straits Times.

His two brothers left for Bangkok last night. They declined to speak to The Straits Times.

The Ministry of Foreign Affairs said that the Singapore Embassy in Bangkok is working with the local authorities to ascertain if there are any more Singaporeans affected.

AGENCE FRANCE-PRESSE, ASSOCIATED PRESS, THE NATION/ASIA NEWS NETWORK

Source : Straits Times - 02 Jan 2009

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More upside for US dollar against Asian units predicted

More upside for US dollar against Asian units predicted

Asia well-positioned to ride out the worst of storm in first half of 2009, say banks

By LARRY WEE

(SINGAPORE) The US dollar is set to advance further against its Asian counterparts as economic woes in the largest economies deepen, especially in the first half of 2009, currency analysts warn.

According to UK-based research firm Forecast: ‘The perverse logic, whereby the worse things get for the US and Japanese economies, the stronger their currencies are likely to be - given the ongoing feedback loop from the real economy to the financial sector and back again - is seen persisting.’

And while currency watchers at Barclays Capital, DBS and Standard Chartered Bank differ in their forecasts for specific Asian units, all appear to agree that in the bigger picture, the greenback could first move to higher ground by mid-2009 versus at least some of its Asian counterparts. They predict higher levels such as S$1.48 or even S$1.60 in the case of US dollar versus the Singapore dollar.

DBS and Stanchart do not expect any change in the Monetary Authority of Singapore’s (MAS) current neutral trade-weighted Sing-dollar stance by the time it conducts its next monetary policy review in April 2009, arguing that the more effective counter-cyclical measures adopted by the Singapore government are likely to come from the fiscal side.

Barclays Capital researchers, on the other hand, allow for a slight downward recentring of MAS’s policy bands in the months ahead.

On a brighter note, all three banks are reassuring clients that Asian countries - and therefore their currencies - are well-positioned to ride out the worst of the storm in the first half of 2009 and should subsequently recover - especially compared with their emerging market counterparts elsewhere, such as in Eastern Europe and Latin America.

Stanchart researchers say: ‘We expect global economic expectations to bottom out in Q2 2009, which is also the time when the credit crisis could be past its worst.

‘Beyond Q2 2009 we expect the US dollar to enter another multi-year decline against most major currencies, including the Singapore dollar.’

But according to Barclays: ‘In the near term, the basic dynamics present in the second half (of 2008) are likely to continue to drive Asian currencies - as the rate-cutting cycle remains far from complete - and, coupled with illiquidity in spot, forward and option markets, may result in exaggerated market adjustment.’

DBS currency analysts suggest Asian currencies should be able to recover 5 to 6 per cent versus the US dollar further out over the course of the next 12 months, but say they may weaken a little more versus the greenback in the nearer term. The economies of Singapore and Hong Kong could be among the worst hit by current global recession worries, but China and India should emerge in better shape.

The DBS analysts say: ‘Asian central banks will probably not let their currencies appreciate much until their international liquidity positions have strengthened and the external sector bottoms and finds a firmer footing with the global recovery.’

Stanchart’s researchers belong to the camp that believes that the US dollar has already peaked versus its major counterparts, and forecast that it could slide to an all-time low of 75 yen in the first half of 2009.

At the same time, however, they say the greenback may still have some upside versus Asian counterparts because the region’s economies are likely to get worse before they get better.

In the shorter term, the Stanchart team feels, worries about this part of the world centre on three key factors - deleveraging, deflation and depreciation.

Down under, Forecast takes a different view. It is concerned that the Australian dollar may be dragged below 60 US cents as its interest rate advantage narrows further versus other currencies.

It says: ‘The still-unravelling once-in-a-generation positive terms of trade shock of 2007-08, combined with the prospect of Reserve Bank of Australia policy rates falling further than (almost) anyone bar ourselves has been formally willing to predict, leaves us wanting to continue giving the Aussie a wide berth once the current year-end correction has run its course.’

Source : Business Times - 02 Jan 2009

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