Wednesday, August 11, 2010

Is It Gonna Rain Or What?

"Our economy has rebounded strongly from last year’s recession. GDP grew 17.9% Y-on-Y in the first half of this year." That was the opening line from Prime Minister Lee Hsien Loong's National Day message on Sunday. He added that "This exceptional performance is the fruit of Singaporeans’ united response during the crisis."

As quickly as the fireworks have faded from the skies, the experts have now changed their rosy predictions to a "statistically possibility of a technical recession". We are now told quarter-on-quarter growth in the April to June period has already slowed to 24 percent from the 45.7 percent of the first 3 months of 2010. Citigroup economist Kit Wei Zheng went so far as to state that the economy could contract by between 9 and 10 percent this quarter, and have zero growth in the 3 months after.

But what about the much heralded and over-hyped impetus to jumpstart the GDP with the opening of the casinos? For some strange reason, Ravi Menon, Permanent Secretary of the Ministry of Trade and Industry, is unable to measure their financial contribution. Well, the operators seem to be more enlightened. Las Vegas Sands of MBS said last month that their Singapore venture turned in a strong performance, generating $127 million in pre-tax profits in the first 65 days of operation. Resort World Sentosa reported in June it was on track to meet it's target of 13 million visitors in the first year of full operation. And don't forget the highly touted spin-offs to related sectors such as hotels, restaurants and retailers, the same justifications employed for bringing in the F1 race slotted for September. So is the glass half full or half empty?

It has been postulated that a gloomy forecast tends to scare an electorate to vote for the status quo. Conversely, painting an overly optimistic future may prompt them to be more adventurous at the polling station. Whatever their strategy, there's always the ready response to a freak result:

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