‘S’pore to be most affected by global recession’

Singapore will be the most affected among Asean member countries if there is a global recession, according to a sensitivity analysis conducted by Maybank Investment Bank Bhd (Maybank IB).

“Our analysis on the impact to Asean gross domestic product (GDP) growth from a one percentage point drop in global economic growth shows that Singapore is the most affected with a 1.8 percentage point drop,” said Maybank IB in a report yesterday.

It said Indonesia and Vietnam were the least affected with 0.23 and 0.3 percentage point drops, respectively.

The Philippines will see a drop of 0.66 percentage point if the global GDP growth shed one percentage point, followed by Thailand (0.75 percentage point and Malaysia (0.78 percentage point).

After analysing 15 global recession watch indicators for the current economic condition in comparison with past global slowdowns and recessions, Maybank IB said there was 25 to 30 per cent chance of a global recession.

Of the 15 indicators, there were four “red flags”, 10 “amber lights” and one “flashing green”.

It said the “red flags” of global recession risk were hoisted by the United States Treasury yield curve, the probability of a US recession, the Global Economic Policy Uncertainty Index and the gold pricecopper price ratio.

However, global financial conditions are accommodative rather than tightening or stressed, thanks to the current global monetary policy easing and the return of major central banks’ quantitative easing.