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By Teh Shi Ning
THE YEAR of the Golden Tiger brings hope for a global economy on the mend, but not without crouching policy, political and weather risks, economists and geomancers say.
Most hope for the recovery of certain past Tiger years, but not the tumultuous drama of others.
'From an economic standpoint, what we observe is that previous Tiger Years saw Singapore entering into or exiting a recession,' said CIMB-GK economist Song Seng Wun.
Take the last two Tiger years - 1998, height of the Asian financial crisis, saw Singapore's real GDP contract 1.4 per cent after the previous year's 8.3 per cent growth; 1986 was when Singapore's first recession since independence petered out, and recovering from 1985's 1.4 per cent dip in GDP to post 2.1 per cent growth.
Official advance estimates are that Singapore's economy shrank 2.1 per cent last year, while growth of between 3 and 5 per cent is expected for 2010, and private sector economists are even more bullish.
But leading indicators from a recent BT-UniSIM study showed that the present recovery may look more like 1986's gradual recovery, even though it lasted about as long as the crisis of 1998.
Comparing the economy to a sick person, the Malaysian Institute of Geomancy Science said: 'When sickness comes, it is like a falling mountain, when one is recovering, it is like pulling a thread out of a cocoon.'
So, while Singapore's first quarter growth is expected to soar to 10 per cent or higher, partly on a low base, Standard Chartered economist Alvin Liew is among others who caution that exuberance be tempered. 'It is a recovery year, but watch your back and don't get your head bitten off.'
Tiger years further back in history yielded tumult on an even greater scale. Years such as 1914, 1938 and 1950 marked the outbreak of World War I, the German invasions which led into World War II and the Korean war.
The Tiger year of 1962 was marked by the Cuban Missile Crisis, which brought the US, the Soviet Union and Cuba to the brink of nuclear war. If that generated much uncertainty but limited economic impact, 12 years on in 1974, the impact of the oil crisis was global. The Yom Kippur War of the year before led to the Opec oil embargo and a massive supply disruption with oil prices quadrupling. As a result the US saw a severe recession marked by stagflation - high unemployment and high inflation.
This Tiger year brings political uncertainties too. Economists say oil price spikes, a top risk in 2010 according to the World Economic Forum's recent report, could be triggered by a conflict in the Middle East.
And closer home, Barclays Capital economist Leong Wai Ho observed that this Tiger year sees political events across Asia, with elections in Korea, the Philippines, Taiwan and possibly even Singapore.
'This could mean that we are less likely to see heavy handed action to curb asset values, but a tougher line on inflation - particularly for politically sensitive items like food, transport and energy prices,' Mr Leong said.
Geomancers too predict a year of erratic weather with alarming and sudden changes. They say 'heavy rainfall and floods will hit agricultural output, and commodity prices will soar'.
Which is a concern of economists too - food price volatility was another top risk named by WEF's report. Mr Leong noted that climate watchers' predictions of moderate to strong El Nino weather this year mean risks in the second quarter for crop production and food prices.
And for the global economy, looming concerns over the withdrawal of stimulus plans and sovereign debt persist.
The Institute of Geomancy Science's division of the world map posits that the sector with China, Japan, Korea, Hong Kong and Taiwan will deliver the most excellent economic performance this year.
Which is quite in sync with economic numbers thus far - Asia has led the recovery. The high growth economies of India and China have seen expansion slow down, but relative to others are still speeding ahead.
'I suppose it's appropriate that the Asian Tiger economies are leading the recovery this time round. The last Tiger year, Asian economies were caught right in the middle of a currencies crisis, but having learnt their lesson well, are now leading the way,' said Mr Song.
This article was first published in The Business Times.
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