Cover WF.indd - SBF Download Area - Singapore Business ...

6Oct•Nov•Dec 2011Economy WatchFrom Bullsto BearsWhile local firms can do little to change the macroeconomicoutlook, most are looking to contain costsand deliver new products to ride out the slowdown.What a difference nineto 12 months can makefor an economy. WhenBiZQ published the first issue of2011, the prognosis by economistswas unanimous: “The Singaporeeconomy is currently buzzing on allfronts. The overall outlook for 2011remains upbeat.”Then, the consensus was fora 4% to 5% growth in Singapore’sGDP for 2011. As the local economycruised towards mid 2011, theofficial forecast was for an upbeatgrowth of between 5% and 7%.Since then, the escalatingcontagion in the euro zone, coupledwith the political stalemate in debtfunding in the US, has made it seemthat all have gone to pot. Now, thebears are out of the woods and infull force.PhotolibraryRisks to global growthRoyal Bank of Scotland’s SingaporebasedRegional Economist EmilWolter told BiZQ the bank expectsa global recession (including Asia)in 2012. This is one of the mostbearish views.“We believe the world is headingfor recession, but this view doesnot seem to be shared by regionalinvestors in general. Anecdotalevidence suggests investors arecomplacent about risks to globalgrowth and, especially, the realdanger of Europe creating a globalliquidity crisis,” said Mr Wolter.While the downbeat mood isshared by many, some like DeutscheBank (DB) err with a bit moreoptimism. DB’s Mr Gregory Luisaid: “While we do not forecasta recession in the US or Europe,our economists do see a relativelysluggish growth picture. In theUS, growth is projected to be atabout trend (level) over the next18 months, with unemploymentpersistently high.”He explained that growth inEurope is expected to drop tosignificantly below trend levels dueto increasing fiscal drag, greaterpolicy uncertainty and systemic riskin the financial sector.