A global recession is “more likely than not”, as economies in western countries are at “stall” speed, said Singapore’s finance minister Tharman Shanmugaratnam.
He noted that the world has now “entered a phase where there is a self reinforcing cycle” of a loss of consumer confidence, which has led more companies to hold back on investing.
“Asia will not be immune to a global slowdown,” he said, adding that the Singapore economy mainly relies on international trade.
His comments came after the US employment report for August revealed that the unemployment rate had stayed at 9.1 percent, deepening concerns that the world’s largest economy is on the brink of another recession.
The latest indication that the global economic slowdown may affect Asia was when the Singapore Institute of Purchasing & Materials Management said the manufacturing sector dropped for the second straight month in August, as companies kept fewer inventories and received fewer orders.
“I am not making a prediction but we are at a stage…where each new shock takes you in the direction of a recession,” Tharman said.
“The markets tend to over react but the markets do tell us something. Directionally, the markets are telling us something very serious.”
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