SINGAPORE’S economy is strong enough to weather the fallout of a US recession this year, while escalating staff costs will be the top problem bosses have to grapple with in 2008, human resource practitioners were told at a conference yesterday.
Speaking at the SHRI Outlook 2008 conference, Hui Cheung Tai, regional economist at Standard Chartered Bank, said the robust domestic demand which drove Singapore’s growth last year will continue in 2008. And this will help soften the blow of a US recession.
But Mr Hui dismissed the ‘decoupling’ notion that a booming Asia, including Singapore, has acquired its own dynamism to escape a US recession without a scratch. China may now have become the largest export market for many trade-dependent countries in the region, but many of the exports to China – half by Stanchart’s reckoning – eventually end up in the US or the EU, he said.
By that measure, Mr Hui finds Hong Kong to have the biggest exposure to a US downturn, followed by Singapore. China, Indonesia and India are the least exposed. So Stanchart is projecting the Singapore economy to expand by 4.5 per cent this year – at the lower end of the official forecast of 4.5-6.5 per cent.
The economy rose 7.5 per cent in 2007.
Mr Hui warned that a US recession would not be followed by a quick bounce-back – it would be a Ushaped rather than a V-shaped recession. According to him, a US downturn is likely to last for about two quarters. The subsequent pick-up would be ‘prolonged’, stretching into 2009.
Meanwhile, Mr Hui noted, inflation has made its comeback and has become a hot issue in the region.
Everywhere, including in Singapore, people are complaining that price increases are higher than what the official figures reflect. Stanchart expects the inflation rate in Singapore to rise to around 5.0 per cent in the first half of the year, before easing to 4.0 per cent in the second half.
While inflation has reared its ugly head as the economy slips into slower gear, the job market is likely to remain tight. ‘It will still be a challenge to fill vacancies,’ Mr Hui said.
A panel led by David Ang, executive director of the Singapore Human Resources Institute, picked escalating pay, fanned by job-hopping, to be the number one headache for employers.
Jacqueline Streimer, employment law editor at CCH Southeast Asia, one of the region’s leading professional publishing companies, said employees in the banking and finance sector get as much as a 50 per cent increase in pay when they jump ship to sign on with another bank. Such turnover leads to a spiral in wage costs because the employer who loses a staff member will then have to pay to advertise for a replacement, suffer downtime and lost productivity as well as need to offer a premium in higher salary to secure a new employee, Ms Streimer said.
Source: Business Times 25 Jan 08