Global crisis and recession

Year 2008 wasnt end at a high note, US economic depreciation impact the global economy cycle. During this grave economic crisis, Government introduce Singapore Budget 2009 to aid companies as to reduce financial burdens. Growth in the global economy as well as in Singapore last year fell well below what was expected. We are now in the midst of a simultaneous recession in all major regions of the world. Prospects for 2009 remain highly uncertain.

Asia has not been decoupled from the decline in the advanced economies. Across the region, industrial production and exports have fallen dramatically in recent months. China industrial production towards the end of 2008 is estimated to have been below half the levels seen at the start of the year. Taiwan’s exports contracted by 42% in December and Singapore’s by 21% . Korea’s latest export data shows a drop of over 30%.

The result is that recession is everywhere. Job losses in the US in Dec 2008 were the worst in 60 years, and unemployment has risen to 7.2%, mounting to 2 million people jobless, and numbers expected to rise. In the Euro area, it has risen to 7.8% and in Japan to 3.9%, and is expected to rise further. Even in China, despite positive economic growth overall, job losses have risen sharply in the coastal provinces. All major regions of the world are experiencing economic decline at the same time, which makes this the first truly global recession in the post-war period. No economy is able to rely on exports to pull it out of recession.

Domestic spending in advance countries, is unlikely to recover for some time. US consumers are over stretched, due to housing loan and bad debts from credit. The slump of US property prices causing many US consumers to be in debts. Thus they will have to gradually repay their loan and therefore spending will be more cautious. Whereas consumers from China and Europe are also facing depreciation values of their homes and assets.

Singapore Government economic forecasts for 2009 wasnt optimistic, projecting GDP to contract by between 2% and 5%. Despite Singapore having the lowest percentage of unemployment, however given the severe economic recession, many more jobs to be at risk this year.

With the length of recession uncertain, do manage your personal income and tide over this year, or years if to come.

To find out for Budget 2009 how much you will receive, please visit Household Budget calculator.