Is the slowing economy really going to be that bad for Singaporeans?

Ask any Singaporean about the economy, and he's likely to turn to you with a black face. Everybody knows the economy is in trouble, but what does that actually mean?

The trouble is, a lot of what's been said about the economy moving forward is guesswork - albeit informed guesswork performed by experts. Here's what you need to know:

Experts are divided over whether there will technically be a recession, but GDP growth is definitely slowing

One day you read about how we're headed towards a recession, and the next you have another commentator reassuring us that that's unlikely to happen.

But does that really matter? The word "recession" is just a technicality used to describe a period of decline. There are certain criteria that must be satisfied before an economy can be said to be in recession.

In the July to September 2016 quarter, the economy contracted by 2 per cent when compared to the previous quarter. If there is once again a contraction in the October to December quarter, the economy will officially be in a recession.

Whether that actually happens or not doesn't take away from the fact that, over the longer term, GDP growth is definitely slowing. Analysts have predicted GDP growth to be between 1 per cent and 3 per cent in 2017, but judging by the way things are going we should probably expect something on the lower end of the scale.

So recession or not, businesses are going to find it more challenging to survive, and employees are going to find themselves facing a tougher job market.

Tips on how to avoid going broke in times of economic slowdown

  • Don't hang out with people who stress you. You can hear these idle (usually jobless) fellows in the kopitiam or foodcourt, complaining loudly about friends, relatives, the Government and taxi drivers. The real issue for them is a shortage of spending cash.
  • Don't lend money. People who need your money usually won't repay you. If they can repay, why do they need to borrow in the first place?
  • Challenge yourself to walk or run over the next six months until you can complete, say, 10km at an expansive park. This is an accomplishment you can gloat to friends with floppy limbs and tofu torso.
  • Don't indulge in "retail therapy". You can't shop and spend your way to happiness. And it's stressful to buy on credit and have to fork out 20 per cent interest payments because you can't repay the full sum to the bank.
  • Chill out in an air-conditioned environment, such as in one of the many public libraries, where practically everything is free except the latte and muffins.
  • Chill out with old folk. Join a charity that organises activities for old people who are poor and living alone.
  • Don't ruin your health via smoking and drinking alcohol.
  • Don't kill time in the mall. It only makes you restless, depressed and even kleptomaniac when you look at all the glitter that you crave but are unable to get your paws on.
  • Don't always meet friends for lunch or dinner in cafes or restaurants. There's nothing wrong sharing a yummy, inexpensive meal in a kopitiam.
  • Enrol in an online course at Coursera.org, which offers thousands of free study programmes conducted by top universities worldwide.
  • Play with your cat (or dog or tortoise). But if you don't already have a pet, don't buy one.
  • Don't start a business because it is fashionable, unless you have conducted thorough market research and spoken to five owners of the kind of business you have in mind.

People are tightening their belts, and you'd be right to follow suit

You might not be able to tell based on the number of Chanel handbags that continue to swarm Raffles Place, but Singaporeans have been tightening their belts, with only 0.6 per cent growth in their private consumption in the July to September quarter. Experts think this is because of slower wage growth and a more difficult labour market for employees.

Well, there's a good chance you should be curbing your own spending, too, as the slowdown is expected to hit most sectors.

One of the biggest implications for employees is slower wage growth. The median income grew by a modest 3.2 per cent in 2016 after adjusting for inflation, and analysts are pessimistic about 2017. So don't go spending all of your year-end bonus just yet.

In addition, the labour market is likely to be soft, which means there will be fewer job openings, so don't be so quick to quit your job without another one lined up, and try not to get caught surfing Facebook by your boss too often.

While the unemployment rate is still low at around 3 per cent despite the spate of retrenchments this year, that's got a lot to do with the fact that there are no unemployment benefits in Singapore, so people will do whatever it takes to get back into the market, even if it means driving taxis.

Brands that have left the Singapore retail scene

  • Retail developers in the current climate are feeling the brunt of the age of internet-shopping. It is not uncommon now in central Singapore to walk into a shopping mall devoid of crowds and anchor tenants of international brands.
  • 1. iwannagohome

    The furniture and home decor store, which first opened in 2007, is in the process of winding down its two outlets in Tanglin Mall and Great World City. A spokesman cited that the closure was due to "the company bringing in new concepts".

  • 2. Francfranc

    Lifestyle and furnishings retailer Francfranc joins the list of Japanese franchises which failed to maintain a foothold on the local market.

  • 3. Goods of Desire

    Another lifestyle and furnishings retailer who has disappeared is Goods of Desire. Hailing from Hong Kong, all their items were stylized with heavy oriental influences to appeal to the East Asian market.

  • 4. Parco

    After raking in millions of dollars in losses, Parco shuttered down its 83,000 square feet premise at Millenia Walk in February 2014.

  • 4. Parco

    One of their last great projects was to provide a space, Parco Next Next, for emerging local designers to set up shop and promote themselves.

  • 5. Celio / New Look

    These two stores always came in a pair in malls. Both brands are by distributor Jay Gee Melwani Group, and are expected to close within the second half of the year.

  • 5. Celio / New Look

    Celio, a French menswear brand, and British brand New Look, have been having closing down sales in the few stores they have left since late last year.

  • 5. Celio / New Look

    Managing director R Dhinakaran mentioned that all the outlets were not meeting sales targets and operating costs were getting too high, while also mentioning stiff competition with e-commerce.

  • 7. Lowrys Farm

    Three years into their venture here, Lowrys Farm closed all eight of their outlets just a day shy of Chinese New Year in 2015.

  • 7. Lowrys Farm

    The closure was due to the stores not meeting enough sales because of "climate difference and fashion taste". As entrants such as H&M finally making their way to our shores, brands such as Lowrys Farm took a beating in sales as their products are much pricier.

  • 8. Raoul

    Though they held a promising position as one of Singapore's top fashion brands, Raoul shut down its last store in Paragon back in February this year.

  • 9. M)phosis

    Another local fashion label which has disappeared is M)phosis. Like Raoul, they were touted as one local label to look out for and they shocked local designers with the news of their closure.

  • 10. Comics Connection

    Now just a remnant in the memories of 90s Singaporean kids, Comics Connections was the place to get the latest comics, trading cards and games.

  • 10. Comics Connection

    For 23 years, this family-run business and its founder Mr Felix Yeo stocked translated versions of popular Japanese manga in his stores, along with anime merchandise. But with the advent of online comics and higher rentals, his store was badly hit.

A bleak 2017?

So, what lies ahead for Singaporeans in 2017?

One thing we can definitely expect is weakening global trade, which is bad news as our economy is very reliant on it. After all, one of the key reasons Singapore became wealthy was because of its dedication to free trade. Exports just took a big dip in October, so….

It's been mere weeks since Trump was elected, and we're already feeling some of the effects-especially the impending demise of the Trans-Pacific Partnership. The TPP would have had a positive impact on the Singapore economy. Then there's Brexit. There probably won't be an immediate fallout, but in the longer term it might negatively affect our economy.

Basically, while different analysts are displaying differing levels of pessimism, everyone is in agreement that we're not looking at a good 2017, or even next few years.

Of course, how badly you'll be affected as an individual really depends on your circumstances. If you have the foresight to be working in a growth industry and are using the slowdown to seize investment opportunities, you could well come out on top. Apart from that, there are still many things you can do to make sure you maximise your money, so follow us on Facebook for more tips as we weather the storm together.

5 things Singaporeans should do in the economic slowdown

  • The gloomy outlook in 2016 is expected to result in higher retrenchment figures, a slowdown in employment and horrible news for a whole bunch of industries.
  • NTUC has spoken: They predict that in the first quarter of 2016, 234 workers in unionised companies could be retrenched, a 31 per cent increase from the first quarter of 2015.
  • No matter how useful you think you are to your company, there's a chance your boss thinks of you, yes you, as an unnecessary cost-especially if he can just dump all your work on the guy in the next cubicle.
  • Job hopping is nothing new in Singapore, and while the employment market is still pretty robust, don't quit without another job lined up unless you're okay with the fact that it's probably going to be harder to find a new one than it was last year.
  • Employers are going to find it harder to justify hiring a new guy, so you definitely don't want to be job hunting desperately at that time.
  • If you're a business owner and haven't bothered correcting certain inefficiencies, this is the time to do it, as you could be in for some tough times.
  • While businesses across the board are likely to feel the pinch, if you're in particularly vulnerable industries like tourism and manufacturing, now is the time to see if there are more efficient, more streamlined and cheaper ways to do what you do.
  • Even if you don't find yourself unceremoniously retrenched, if your company is badly affected you can expect a smaller (or even no) bonus, as many people did during the 2008 recession, or even a pay cut.
  • This is not exactly the best time to start a designer bag collection or plan a lavish shopping trip to the factory outlets in California.
  • Everyone's investment mix is different, but if you're a stock investor who buys and holds for the long-term, this may be a good year to monitor stock prices more closely.
  • At this point, many stocks are quite heavily undervalued, and property prices are still on the decline. It's anyone guess when they'll rebound, but for now, investors should pay attention.

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