What will happen in more politically unstable Asian countries

From The TimesApril 15, 2009

And if it can happen in Singapore...

With more bad economic news out of the city state, the worry is what will happen in more politically unstable Asian countries

David Wighton: Business editor's commentary


They are not talking about green shoots in Singapore, at least not economic ones.

The city state's central bank effectively devalued its currency yesterday as figures showed that the economy shrank by an extraordinary 11.5 per cent in the first quarter compared with a year earlier.

The Government revised its forecast for the full year to a slump of between 6 and 9 per cent.

So successful for so long, Singapore is heavily exposed to sectors hardest hit in the current downturn - finance, shipping and manufacturing. Exports were down 17 per cent in the first quarter.

The very modest devaluation will not help much - at least until export markets pick up - and the authorities will be wary of a bigger depreciation of the currency in case it undermines the confidence of international investors.

Analysts believe the downturn may prompt an exodus of expatriate workers undermining the efforts to encourage immigration and turn Singapore into a finance hub for South East Asia.

The worry is that where Singapore goes, other less politically stable Asian countries may follow.

http://business.timesonline.co.uk/tol/business/columnists/article6094612.ece