Singapore, Taiwan GDP may shrink 10-11% in 2009 : CLSA

This article belongs to the Singapore recession watch story arc.

bloomberg.com :

Taiwan and Singapore may see their economies shrink by a tenth this year as Asia's export-dependent nations trade less with each other, according to CLSA Asia-Pacific Markets. Taiwan's gross domestic product will probably decline 11% and Singapore's economy will contract 10%, according to a CLSA report published today [4 Feb 2009]. South Korea's GDP will drop about 7%, the report said. "In a number of countries, the wheels have fallen off the primary driver of Asian growth: exports." Asia's export-driven economies are slowing as demand for their products diminishes amid recessions in the US, Japan and Europe. Hong Kong, Malaysia and Thailand will see GDP contractions of 5% this year, the report said.

- I dread the day that I have to add a Singapore depression watch page to replace the one on the Singapore recession watch. Because that's what is going to happen when we hit either or both of these figures :

a. The Singapore GDP contracts by 10% or more
b. The Singapore unemployment rate rises to 10% or higher

There is scant agreement on what exactly constitutes an economic depression but we could use these two benchmarks for now. With the leading economic indicator NODX hitting -20.8%, we should be on alert for a Second Great Depression type of scenario over here. Unless we can pull off a recovery in the second half of 2009 or by 2010 like what those economists say. But you know what I think about those economists in general. If they didn't see this whole thing coming what makes them think they know when it will end?

So. One of three things : all-out collapse, a sluggish muddle-through, or all-out hyperinflation - take your pick.

NYMEX crude oil rises above $41 and off $32.70 lows as OPEC may cut production further

bloomberg.com :

NYMEX crude oil prices rose for a second day in New York after OPEC's president said the group may reduce output further to trim stockpiles. Angolan Oil Minister Jose Maria Botelho de Vasconcelos, the current OPEC president, said "new measures" may be taken at OPEC's March 15 meeting in Vienna if the current round of cuts don't raise prices. OPEC reduced 1.05 million barrels a day of production last month, according to a survey of producers, oil companies and analysts.

Crude oil prices for Mar 2009 delivery rose to as much as $41.13 a barrel on the New York Mercantile Exchange. Prices are down 8% this year and 54% from a year ago. OPEC agreed on 17 Dec 2008 to cut production as oil prices headed for their first annual decline since 2001. For Angola, an oil price of $75 a barrel "would already be very good," Botelho de Vasconcelos said yesterday [3 Feb 2009]. There is a "50-50 probability" that OPEC will trim quotas at its March 15 meeting, Algerian Oil Minister Chakib Khelil said. The price of oil for delivery Jan 2010 is 32% more than for the current month, increasing the opportunity for traders to profit from storing crude for later use. This is known as contango, in which a future month's price is higher than the one before it.

- This is early stage stuff as yet (no *ahem* crude comments please if this turns out to be wrong) but it does look like crude oil prices may have done a little bit of a double bottom off the $32.40 and $32.70 levels. From the charts, the price looks like it is comfortably trading in the $40-$50 range. Time for a bit of base-building perhaps?

Yes, there are a thousand and one factors pushing and pulling on the oil prices but here's something that you might want to take note of - the TNX (10-year Treasury) yield has pulled off its own rather dramatic double bottom (check out the 1-year chart and then the max chart). The community is still skeptical but there is some talk that this may be an indicator of a return of inflation. Accordingly, gold prices have jumped to the $900 level decisively breaking through (yet again) the famed $850 level of Jan 1980 and silver prices have also done quite well recently. So we'll see.

(2009-02-04 14:20:31 SGT) [Energy] Permalink

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