Tuesday, January 1, 2013

What some chiefs say about 2013 outlook.....

Courtesy from Straits Times

Last night our nation rang in the 2013 year ( chinese astrology termed it the year of water snake ) with spectacular fireworks displayed across the marina bay skyline. The fireworks, which illuminated the sky, also provided a backdrop for the hundreds of white spheres bobbing in the bay, each containing different wishes for 2013 penned by revellers. Watched by tens of thousands of attendees at the Bay countdown party, the atmosphere was electric as the crowd counted down the seconds in unison. The drizzle earlier in the day did not deter or drench down the spirits of the crowd.
As for the coming year businesses will be facing with probably some downsizing, relocation of or closure as a last resort.  The tightening of foreign labour will surely have great impact to businesses here especially like our shipyards depending on big pool of semi and skilled foreign labour.
Asia will continue to be the growth engine for the private banking industry. Significant amounts of new wealth continue to be created in the region and in China, Indonesia, Taiwan and the Philippines.
Most businessmen expressed mild optimism about their prospects for the coming 12 months. 
Yesterday, Prime Minister Lee Hsien Loong said that growth for this year would come in at 1 per cent to 3 per cent. All eyes will be on the global economy for further signs of recovery in the United States and a reversal of fortunes for crisis-hit Europe.
Courtesy from Straits Times
Our chief, Keppel Corp Mr Choo Chiau Beng said: "It depends on the world economy. If it's benign, then we'll be doing quite good. If it's tough again, we'll have to struggle with the slowdown in property sales."
At least politically, there is stability ahead, with the US presidential election and the China leadership transition completed.
The giant US economy is tipped to turn around and that could benefit businesses here. 
Courtesy from Straits Times
Singapore Exchange (SGX) CEO Magnus Bocker said: "Asia will continue to be the heart of economic growth, even with a more measured pace."
The SGX is also upbeat, tipping that low interest rates will act as a further spark for interest in stocks to grow.
Mr Bocker said: "The SGX continues to serve as the access point for global investors managing Asian equities. We are also seeing a returning interest from retail investors to the stock market."  
The robust regional economy is expected to boost local firms in the logistics and supply chain sector.
Private bankers are also bullish about the industry's prospects, albeit in a more moderate tone.
UBS' Mr Koh said: "We've seen significant growth in Singapore, Hong Kong, Indonesia and Thailand. While all the Asean markets are growing, I see tremendous opportunities in Laos, Vietnam, Myanmar and Cambodia."
One of the more upbeat industries in Singapore is construction, given the strong pipeline of government projects. "The outlook will remain positive but competitive," said OKP Holdings managing director Or Toh Wat.
"Based on expected expenditures announced, at least $55 billion worth of transport infrastructure is being built or will be built by 2021 in Singapore."
He is optimistic about his firm's prospects, noting that OKP is "well positioned to benefit from the public spending on transport infrastructure".
 How is the Global Economic Outlook for 2013  
The global economy has yet to shake off the fallout from the crisis of 2008-2009. Global growth dropped to almost 3 percent in 2012, which indicates that about a half a percentage point has been shaved off the long-term trend since the crisis emerged. This slowing trend will likely continue. Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won’t do so in 2013. Uncertainty across the regions – from the post-election ‘fiscal cliff’ question in the U.S. to the Chinese leadership transition and reforms in the Euro Area – will continue to have global impacts in sluggish trade and tepid foreign direct investment.
- Across the advanced economies, the Outlook predicts 1.3 percent growth in 2013, compared to 1.2 percent in 2012. The slight uptick is largely due to the Euro Area, which is expected to return to very slow growth of 0.2 percent after the -0.6 percent contraction in 2012. U.S. growth is expected to fall from 2.1 percent in 2012 to 1.8 percent in 2013.
- In the medium-term, the outlook expects the U.S. and other advanced economies to go some ways toward closing large output gaps – that is, the difference between current output and the level of output an economy can produce in a noninflationary way, given the size of its labor force and its potential to invest in and create technological progress. The current output gap is a result of weak demand due to the 2008-2009 crisis. This development should allow the U.S. to average 2.3 percent annual growth during 2013-2018 before falling to 2.0 percent in 2019-2025. In the same two periods, Japan is expected to grow at 1.1 percent and 0.9 percent, respectively.
- A more significant slowdown is expected for less mature economies over the next year – and beyond. Overall, growth in developing and emerging economies is projected to drop from 5.5 percent in 2012 to 4.7 percent in 2013, with growth falling in China from 7.8 to 6.9 percent and in India from 5.5 to 4.7 percent. From 2019-2025 emerging and developing countries are projected to grow at 3.3 percent.
The IMF’s forecast for China in 2013 is reasonable at nine percent inflation-adjusted growth. That forecast, however, assumes no collapse in Europe, which is a pretty big assumption. Companies doing business with China, as well as companies doing business with other companies that do business in China, should understand both the upside and downside potential for that country’s economic outlook.  China’s economic growth has been very good for quite some years. The consensus forecast now is that 2012 growth will be right in line with the country’s long-term growth potential of about nine percent per year. However, there are still five key sensitive issues to consider and which may turnaround the situation should there be any swing in circumstances :
  • Inflation fighting
  • Housing bubble
  • Export markets
  • Cronyism
  • Value of the Yuan

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