The Singapore Government have just cut their forecast economic growth rate to near 0 per cent. The impact of the U.S.-China trade war is really hitting, and it’s going to hit us harder too.
Australia – on whose economy we are very reliant – has had a massive stimulus passed in its last budget. Also, straight after their election the Australian Federal Reserve Bank cut interest rates to 1% .That’s the lowest level on record. The RBA Governor Glenn Stevens has said the probability of recession in Australia is 100%, “only the timing is uncertain”. Droll as usual. Australia hasn’t been in a recession for over 20 years.
As to New Zealand, in May our Treasury was projecting growth accelerating from 2.4% to 3% in 2019-20. Our Reserve Bank has reacted the same way as the RBA, and pessimistically cut to 1%. Both can’t be right.
There’s plenty of concern about Auckland property, but property values outside Auckland are at record highs. Unemployment is low, but it looks like it needs to go even lower to get real wages forced up. The government has plenty of borrowing headroom if it really needed to, which is excellent because business sentiment is really terrible and two of our biggest businesses in Fletcher Building and Fonterra are in recovery mode from a very, very low base.
There are no breakout companies on our sharemarket or taking over the world.
Singapore’s economic signal is important to watch, and while it doesn’t make recession here certain, it’s a signal that it’s more likely and soon.