Everything About the Projection of S’pore Recession in 2020 for the Bubble-Tea-Drinking Generation

Yesterday, as you go online, hoping to watch some cat videos to relax, you saw headlines that looked dim yet chim.

Recession: that word alone sounds scary.

Would you be losing your job? Would your $0 bank account go down even further, to -$1,000? And worst of all, would all bubble tea chains close down, and you’d have to revert to the days of drinking teh peng?

Well, fret not. As your BFF, we’ll make this easier for you to understand so that you won’t go sell your organs.

What is a Recession?

According to Investopedia, the saviour for all business students, a recession “is a macroeconomic term that refers to a significant decline in general economic activity in a region, country, or the entire world that goes on for more than a few months.”

Basically, it means we stop growing economically. A country is like a person: without growth and money, it’s going to be disastrous.

So how does it affect us, the bubble-tea-drinking generation?

For a start, in the entire economy, it means that unemployment rate would increase, income might decrease and people spend less.

But for individuals like us, the most worrying aspect is of course a loss in job or the difficulty in finding a new job. Small businesses might close down as clients might pay later.

While it’s relatively short term, the repercussions might drag on for years: for example, if you’re laid off, you might not find another job for years.

So, why are there news about Singapore possibility facing a recession?

Trade War Affects Singapore

You might have already known about this through the Huawei incident even if you don’t read the news: there’s an ongoing trade war between the US and China.

Simply put, a trade war is when a country imposes high import taxes to “punish” other countries, or to keep imports low so that the country would manufacture everything domestically and therefore create more jobs.

Singapore is pretty dependent on export: in 2016 alone, we exported USD$329.7 billion worth of goods. That means this amount of money is sent into Singapore to help the economy.

In comparison, the amount of taxes Singapore get in 2017-2018 is mere SGD$50.2 billion.

So you can tell that exports are good business.

To give you an example of an export, let’s create a fictional company called BaddyFeed. BaddyFeed creates pens, and with 10 staff, they create one million pens a year and export them to the US, China and many other countries.

As other countries buy the pens, Singapore earns as money is coming from other countries to Singapore. That’s good for our economy.

But with trade war, other countries either don’t want to buy BaddyFeed pens, or require BaddyFeed to pay a high tax before companies in other countries can buy them.

So the countries might just create their own pens…and BaddyFeed, together with Singapore, suffers.

Report by the Institute of Chartered Accountants and Oxford Economics

With the trade war, we’d have expected to be collateral damage, and finally, a projection is published by the financial experts on 4 June 2019.

According to the report, Singapore’s economy is projected to slide from the 3.1% growth last year to 1.9% this year, before recovering slightly to 2.2% in 2020.

Any drop is bad, since we’re talking about a lot of money.

At this moment, the signs are quite clear: in the first quarter of this year, we’ve only grown by 1.2%, which is the lowest growth rate in 10 years.

According to the experts, these are the reasons that could contribute to the recession:

• Trade war
• Global ICT cycle is slowing down, affecting electronics manufacturing sectors here
• China is buying less from Singapore
• We’re not spending enough in Singapore

The report stated that Singapore is the worst hit amongst five other countries that they tracked in Southeast Asia.

But of course, do remember: this is all projections.

For all you know, one smart guy might come out with a social media platform called LegBook that gets 100 million users in a day and ta-da: money’s flowing into Singapore and we’re looking at growth beyond our imagination.

After all, no one can predict the future.

So for the bubble-tea-loving millennials?

Don’t worry, everything’s fine so far.