Singapore faces devastating exodus of foreigners
Wednesday, 21 January 2009
Leo Lewis
Times online
Singapore
faces an exodus of 200,000 foreigners as the financial services and
manufacturing industries scythe through their workforces and the
city-state grinds towards the worst recession in its 43-year history.
The
expected exodus, predict analysts at Credit Suisse, could see the
number of people living in the tiny but economically powerful island shrink more than 3 per cent to just 4.68 million by 2010 in a shift
that would severely undermine the government’s 22-year efforts to boost
the population through immigration.
A broad rule of thumb, said analysts
at UBS in Singapore, is that nearly every new job created over the last
few years went to a foreigner. The economic policies of the city state
have overtly relied on its ability to attract talent and skills from
abroad.
The departure of thousands of ex-pat bankers, lawyers
and accountants between now and 2010 is expected to lead a secondary
exodus of manufacturing, construction and service sector foreign
workers.
Job losses will hit Singapore hard, said Credit Suisse
economist Cem Karacadag, “because they affect more highly paid workers
and could result in a semi-permanent drip in the population”. He added
that the potential drop “would have far-reaching implications for the
economy” including a possible sharp contraction in private consumption.
The
knock-on effects of a Singapore exodus, some real estate analysts
believe, could also see property prices fall by as much as 30 per cent
from their current levels.
Credit Suisse’s grim population
forecast comes amid warnings that among non-Japan Asian countries,
Singapore’s open economy may be hit hardest by the global downturn.
Consumption growth, said the report, could fall to almost zero.
Analysts
at believe that the country’s GDP may contract by 2.8 per cent in 2009
as rising unemployment hammers domestic growth and the collapse of
consumer confidence around the world hits exports.
Mr Karacadag
raised a further red flag for Singapore’s economy by warning that there
was a risk that forecasts were still underestimating the effects of a
broad Asian downturn and further terrible news from the financial
sector.
Singapore – the world’s busiest port by tonnage handled
and the home of some of the world’s largest shipping companies - is
already feeling the pain of an alarming slump in global trade.
With
the credit crunch still affecting trade finance and the demand for
Asian manufactured goods in acute decline, hundreds of container and
dry-bulk ships now sit unneeded and at anchor outside Singapore. The
stagnation, say brokers, is matched onshore.
In tandem with the
warnings over a possible population crunch, concerns are growing among
investors over the health of Singapore’s domestic banks. The “benign
asset quality” environment in which Singapore banks have thrived, say
analysts, has now reached an inflection point.
The ratio of non-
performing loans is expected to rise sharply as the construction boom
that has filled the Singapore skyline with towers and cranes begins to
deflate.
Between 2003 and 2008, the population of the city state
soared nearly 18 per cent in an increase driven predominantly by
foreigners hired to meet Singapore’s endemic shortage of workers during
the good times.
When global trade, investment banking and Asian
stock markets were booming, Singapore successfully fashioned itself as
a financial hub to rival Tokyo and Hong Kong and the expatriates
flooded in – around 200,000 jobs were created in the financial and
business services sector over the last four years.
A large number of jobs are expected to be lost in manufacturing, which accounts for about a quarter of Singapore’s GDP.