Positive signs of economic recovery in Asia, especially China, coupled with pick-up in the equities and property markets have given us optimism as we approach 2010. In July, the International Monetary Fund (IMF) boosted its 2010 global growth forecast to 2.5%, an improvement of 0.6 points from its April forecast (Source: AsiaOne News, 'IMF projects stronger 2010 recovery from global recession', 9 July 2009).
In the same article, Olivier Blanchard, IMF Chief Economist stated that while the world economy is still in recession, recovery is in sight. According to him, financial conditions have improved and are better than expected, owing mainly to public intervention. Moreover, recent data suggests that the decline rate in economic activity is moderating.
In this light, the IMF hiked its outlook for Japan up a hefty 1.2 points from 1.7% in 2010. Growth this year in the second-largest economy was estimated to be a negative 6.0%, instead of the 6.2% contraction previously forecasted. China would lead with expansions of 7.5% in 2009 and 8.5% in 2010, while India would grow 5.4% and 6.5% respectively.
It would appear that we are finally seeing the silver lining following the post-Lehman Brothers crisis dubbed the ‘worst financial crisis since the Great Depression’. Yet some people remain apprehensive about the recovering future and whether this pick-up is sustainable. In the words of the U.S. Federal Reserve chairman, Ben Bernanke: ‘Even though from a technical perspective, the recession is very likely over at this point, it's still going to feel like a very weak economy for some time as many people will still find that their job security and employment status is not what they wished it was.’ (Source: Channelnewsasia.com, ‘Bernanke says U.S. recession likely over technically’, 15 September 2009)
As 2009 comes to a close, we take the time to poll Singaporeans aged 25 and above to find out:
- How they have been affected by the dark clouds in the earlier months of this year.
- If they are feeling much happier than they did in the first half of the year.
- Whether they feel upbeat and confident as they enter 2010.
49% Says We Are Happier
Of those surveyed, most feel upbeat and optimistic about the future as 2009 wraps up, though a small percentage are still worried about life ahead.
A good 49% of the respondents feel happier about their lives, work and business compared to the first 6 months of the year. This result is hardly surprising given the stream of good news since mid-year and the all-round cheer that has been brought about by reports of record-breaking sales at the Great Singapore Sale and various fairs like NATAS and Comex this year.
The constant assurances that no one will be left behind in this crisis and the S$20.5 billion Resilience Package 2009 unveiled by the Singapore Government at the start of this year contributed to the general optimism of Singaporeans.
How Happy Are We Today Compared To 6 Months Ago?
Family Remains Top Priority During The Crisis
The survey also showed that about 30% of those polled had to reduce their monthly savings during the crisis while 40% cut their personal spending in order to manage their finances. Yet, only 25% stated that they had reduced family-related expenditures. This clearly revealed that the family unit remains a top priority to Singaporeans even during the downturn. This result ties back to our earlier research in January 2009 that Singaporeans will weather the recession by cutting back on personal savings and expenditure, and will attempt to avoid impacting family expenditure negatively.
Younger Generation Is Still Spending
While the older group is able to take downturns in their stride with their experience from surviving SARS and the 1997 Asian Crisis, the younger ones aged between 25 to 34 years old are uncertain about work as well as their earning power, given that this is their first time encountering an economic crisis. However, the worrying factor is, 18% of them are increasing their personal spending instead of adopting prudent measures to ensure they are financially protected.
This phenomenon highlights the importance of nurturing financial responsibility and maturity in the younger crowd, especially in the face of a new financial world order. Focus needs to be placed on balancing priorities and opportunities while achieving a sound financial portfolio.
Staying Cautious
Though a large percentage of those surveyed expressed optimism, there are still those who remain pragmatic and cautious. One in 5 is still worried about life and work as compared to the first 2 quarters of this year; 2 in 5 people are uncertain about what lies ahead and if recovery can be sustained over a longer period.
This could be due to concerns about the fragility of the recovery and possibly, even the speed of the rebound in the property and stock markets which are making some feel uncomfortable.
The most vulnerable group is likely to consists of the ones married with children working in less senior, white-collar positions including the blue-collar workers; and those belonging to the low to below average income category. In a recent article written in The Straits Times, Manpower Minister Gan Kim Yong commented that the labour market is likely to remain weak for the rest of the year (Source: The Straits Times, ‘Rise in the chronic jobless’, 16 September 2009)
To stay competitive in this current economic climate, it is therefore important for us to press on with training and upgrading, so that we can get our workers to stay employed. These refer mainly to executives and technicians as well as those in the lower rungs of the corporate hierarchy. Workers in this category have been strongly encouraged to re-invent their skill sets or acquire new ones. On the whole, the outlook remains uncertain because companies are still adopting a conservative hiring approach.
What Does 2010 Hold?
Vasu & Anne Say
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| Singapore's economic outlook is closely tied to that of global and regional economies. Though the global economy is on the mend, it remains unclear at this stage if the recovery can be sustained once the economic stimulus measures wear off. Forecasters are more optimistic about the outlook but some have warned that the global economy may take longer than expected to recover. |
| For the 47% who are more upbeat: |
| VASU: |
Since they are feeling more confident, they probably have a stronger risk appetite and the stomach for volatility. Thus, they can consider investing in areas like Asian equities and commodities, which are likely to offer decent returns over a three to five year time horizon. |
| ANNE: |
Most have indicated that family remains their top priority during the downturn and this brings up one key lesson as we move forward. The need to ensure our family members are protected from future uncertainties is important. They may want to use this opportunity to review their insurance protection for their family against critical illness, disability or death. |
| For the 38% who are uncertain: |
| VASU: |
They may still wish to invest some of their funds in equities, but spread out their investments over a longer time period of say 18 months or more, so that they will still be able to participate in markets if the recovery falters and stocks weaken. |
| ANNE: |
Taking a long-term view, conservative management of finances by this group may mean that they are missing out on opportunities to grow their wealth. They should start taking steps to review their investment portfolio and focus on long-term goals. |
| For the 15% who are more worried: |
| VASU: |
It may be better for them to invest minimally in equities and to stay largely in cash for any emergencies. If they have spare funds, they can capitalise on market weakness to invest small amounts. |
| ANNE: |
For a start, they may want to take stock of their financial status before embarking on investment plans. Find out their level of liquidity to manage emergency and have at least 6 months of liquidity to handle monthly household expenses. Plus, they should take stock of their current debt level and reduce any debts. |
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*Source
From a survey commissioned by OCBC Bank on “Singaporeans’ Outlook on Work and The Economy” conducted by Idealog Singapore, via street interviews with a representative sample of 150 Singapore adults aged 25 to 49 years old.
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