May 17, 2009
Crisis will soon be just a memory
From a packed musical to long queues at diners, the signs are pointing to better days ahead
By Goh Eng Yeow
The clouds of gloom have parted and a ray of hope now shines on investors, as global stock markets stage a two-month rally.
Even the spectre of a global pandemic cast by the Influenza A (H1N1) virus has failed to dampen the exuberance in the air.
Cats, the well-known London musical, played to capacity audiences at the Esplanade for four weeks before ending its run on May 3.
I was among those who caught its performance, relishing it as much as the first time I watched it in London many years ago.
What must have been surprising was its success, considering that Singapore is undergoing its most serious economic slowdown since independence in 1965.
There was a palpable mood of cheer that night last month when I caught the show, as the well-dressed audience took their seats.
Across the road at Marina Square where I grabbed a quick dinner before the show, there were long queues of hungry diners waiting to get into popular restaurants - not a scene a person would associate with a contracting economy.
The ubiquitous queue reminiscent of the boom time in 2007 was back. Last month, people lined up overnight to buy units in Parc Lumiere, a housing project in Simei to be built by a private developer under the HDB Design, Build and Sell Scheme.
It was a stark contrast from February, when the gloom was so prevalent that retailers complained of a sharp drop in sales. Even the usually busy restaurant at my club showed a visible drop in the number of customers.
The difficult economic times touched even global pop stars like Rod Stewart, who told his audience when he performed in Singapore in February that he had just sold his Ferrari.
True, bread-and-butter issues still rule the roost, jobs are still being lost, and companies struggle to keep their businesses running. Business, however, has not fallen off the cliff.
And the sense of panic, which gripped Singaporeans last December, has subsided.
The $20.5 billion Budget, unveiled in January, has succeeded in cushioning part of the blow from the fallout of the global economic crisis.
A similar miracle is occurring across Asia, where governments are pumping in huge sums of money to keep their respective economies afloat.
Even the darkest prophets of doom will concede that Asian economies are nowhere in the dire straits predicted by them when they made their gloomy assessments last December.
Asian economies are slowing down all right, but they are not crashing at the near double-digit rates some economists were predicting at the start of the year.
Last month, when I was in South Korea for a short holiday, I was surprised that there were few signs of financial distress among South Koreans as well.
This was despite the constant stream of grim financial news reports about the South Korean economy, reminding readers of the 30 per cent collapse in the Korean won since last year and the spectacular slump in the country's exports as demand in key markets such as the United States sagged.
Signs of an economy in rude health were everywhere. Traffic in Seoul snarled to a crawl during rush hour, while the Myeongdong shopping district in the heart of the city was crammed with shoppers, with hardly a shuttered outlet in sight to suggest that there was a business slowdown.
It was a big contrast from 10 years ago during the Asian financial crisis when once-proud South Korean bosses were reduced to waiting at dinner tables after their companies went belly up.
Mr Manu Bhaskaran, an economist with consultancy group Centennial, says there is a plausible explanation for the disconnect between the grim economic data and the largely normal everyday life in Singapore.
'We have one part of the economy that is largely foreign and another part that is largely Singaporean,' he explains.
The components of the economy currently in free fall - manufacturing and parts of finance - are largely foreign. They involve multinational firms that employ large numbers of foreign workers and global investment banks, with highly paid staff redeployed from New York and London.
'In the boom, they did not seem to boost the welfare of ordinary Singaporeans as much as the gross domestic product growth numbers implied, and they are not hurting Singaporeans very much on the way down either,' MrBhaskaran says.
During the current slowdown, many companies have chosen to cut the pay of Singaporean workers.
'Pay cuts of around 10 per cent to 15 per cent are not nice, but neither are they painful enough to force an abrupt cut in spending,' he notes.
He warns, though, that unless the global economy picks up soon, companies may have to undertake more painful restructuring, like cutting jobs, which has so far been largely avoided.
And that will unleash a fallout - falling consumer prices, rising loan defaults and plummeting real estate values - which will make Singaporeans feel poorer.
This is not a nice thought to entertain on a Sunday, but I am optimistic that most of us will muddle our way through this economic crisis just fine.
To paraphrase the lyrics from Memory, the theme song for Cats, dawn will come, the current economic gloom will become a memory and a new era will have begun.