Dual economy?

[davidtan]

Nice forum here. Would like to know your opinions of the 'dual economy' phenomenon here in Singapore. Some newspaper columnists are saying there are 2 different groups in Singapore - one is mostly unaffected by the downturn while the other is. The unaffected group consists mostly of locals and the affected one is made up of foreigners, all thanks to the government policies of taking care of locals foremost. That is why we still see a booming GSS and housing prices remaining stable, which are evidence that locals are mostly safe from the recession. What are your thoughts?

[Qaz]

Interesting that you divide the economy via locals & foreigners. How exactly are foreigners here affected by the downturn?

Most of us that are visibly affected are low income workers who have lost jobs or faced pay cuts. Mthly wages are only enough for expenses and could not accumulate huge savings to act as buffer if we loose their jobs or get pay cuts.

The high income earners are mostly affected in term of real $$, but they will still have enough to go about the usual lifestyle.. only their investements are affected. They will have no problems with common expenditure even if they have income for the next 6 mths... but of cos may require seeling investments at a loss...

the OP did not come up with the dual economy concept. it's the academics who did. they argue that it's the foreign workers, profesisonals and executives who are more affected in this current recesison, in the sense that more of them compared to locals were retrenched and left Singapore. low-wage Singaporearns and PRs get to keep their jobs because of the ingenious "jobs credit" scheme.

[davidtan]

Are you referring to this article?
Singapore?s economy: Downturn? What downturn?

Interesting theory on the time lag it takes to hit ordinary Singaporeans.

Our back-of-the-envelope estimates suggest that roughly half of the economy is foreign. Interestingly, the parts of the economy that are currently in free fall — manufacturing and key parts of finance — are largely foreign. These activities boomed between 2005 and 2007 and have now collapsed. In the boom, they did not seem to boost the welfare of ordinary Singaporeans as much as the GDP growth numbers implied, and they are not hurting Singaporeans very much on the way down, either.

But, this is not the entire picture. The very nature of the economy also suggests that the pain for ordinary Singaporeans is coming — but with a lag... But, falling consumer prices will raise the real cost of debt and increase stress on borrowers. Default rates will rise. In addition, falling rentals and falls in real estate prices across the world will also put downward pressure on real estate prices in Singapore.... The data on the Singapore economy could get less bad, but the welfare of ordinary Singaporeans will start to take a beating.

But I see a current upward pressure on property prices!

Well all I can say is that we are still affordable =)

Originally Posted by affordable

Well all I can say is that we are still affordable =)

It's less so now. Simple example: Starting pays remain more or less the same, but HDB prices are going up like crazy. The older generation may have benefited from the increase but I pity the new graduates.

[bjhchong]

Less now,

You forgot to mention the 7% rise in 'lectricity bill & the increase in pertol price (they are quite sneaky about this)... gosh... ARE WE STILL IN A DOWNTURN HERE OR WHAT?!??!?