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Singapore is first East Asian country to slip into recession Oct 2008

The first decade of the 21st century ended with a bleak world economic outlook following the 2008–2009 global financial crisis, which was headlined by the collapse of American investment bank Lehman Brothers in September 2008.[1] By the third quarter of 2008, the banking crisis in the United States (US) and its ripple effects had greatly stressed the Singapore economy, causing it to be the first country in East Asia to succumb to recession. It was hailed as Singapore’s worst ever recession.[2]

News of massive losses incurred by the country’s sovereign wealth funds, Government Investment Corporation of Singapore and Temasek Holdings, through wide exposure to US “toxic assets” raised public furore.[3] Ordinary citizens who had poured their life savings into financial products such as Lehman's Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 LinkEarner Notes became angry when their investments soured, and they clamoured publicly for redress from banks and brokerages that had sold them the products.[4] At the centre of the minibond fiasco was the Development Bank of Singapore (DBS), which took the drastic step of retrenching 900 staff in November 2008 to cut costs. The move was criticised as being sudden and pre-emptive by then Labour chief Lim Swee Say.[5] Other local companies and businesses resorted to wage cuts, wage freeze, hiring freeze, shorter working hours and even compulsory leave to ride out the crisis.[6]

To help Singapore businesses and workers cope with the economic downturn, the government pledged S$2.9 billion in November 2008 and a further S$20.5 billion Resilience Package in January 2009.[7] The Singapore economy weathered the financial storm better than feared with Prime Minister Lee Hsien Loong announcing in August 2009 that “the worst is over for the Singapore economy” and that “the eye of the storm has passed”. In November, the Ministry of Trade and Industry declared that the recession was effectively over and projected a growth forecast of between three and five percent in 2010. The economic figures achieved in 2010 defied gloomy predictions made the year before when the recession was in full steam.[8]

1. Clark, A. (2009, September 4). How the collapse of Lehman Brothers pushed capitalism to the brink. The Guardian. Retrieved August 28, from The Guardian website: http://www.theguardian.com/business/2009/sep/04/lehman-brothers-aftershocks-28-days
2. Spore’s economy in recession. (2008, October 10). Today - Afternoon Edition, p. 1; Chua, P. M. (2008, November 19). Budget deficit to overshoot estimates. The Business Times, p. 1. Retrieved from NewspaperSG; Thangavelu, S. (2009, January 5). Riding the global economic crisis in Singapore. Retrieved August 28, 2013, from East Asia Forum website: http://www.eastasiaforum.org/2009/01/05/riding-the-global-economic-crisis-in-singapore
3. Temasek and GIC “can be more open” about key decisions. (2009, May 30). The Straits Times, p. 47. Retrieved from NewspaperSG; Singapore. Parliament. Parliamentary Debates: Official Report. (2009, May 28). Temasek Holdings (Sale of Bank of America shares) (Vol. 86, col. 550). Retrieved August 28, 2013, from Parliament of Singapore website: http://sprs.parl.gov.sg/search/topic.jsp?currentTopicID=00073589-ZZ¤tPubID=00075277-ZZ&topicKey=00075277-ZZ.00073589-ZZ_1%2B%2B
4. Tan, D. W., & Chan, F. (2008, October 19). ‘When it happened, I was shocked’. The Straits Times, p. 8; The Lehman Minibond saga. (2008, October 22). The Business Times, p. 30; Chan, F. (2008, September 25). Minibond investors turn to MAS. The Straits Times, p. 49; Minibond holders still grappling with outcome. (2008, October 18). The Business Times, p. 7; Tan, C. (2009, September 11). Investors sue RBS, Lehman S’pore. The Business Times, p. 4. Retrieved from NewspaperSG.
5. Chia, S. (2008, November 15). Labour chief disappointed by sudden layoffs at DBS. The Straits Times, p. 1. Retrieved from NewspaperSG.
6. Teh, S. N. (2009, April 27). Layoffs remain companies’ cut of last resort. The Straits Times, p. 3. Retrieved from NewspaperSG.
7. Henson, B. (2008, November 29). Govt’s focus is still jobs in this crisis. The Straits Times, p. 62; Teo, A. (2009, January 23). An anchor for jobs, a spur to lending. The Business Times, p. 1. Retrieved from NewspaperSG.
8. Foo, A. (2009, August 17). Worst is over for Singapore’s economy. The Straits Times, p. 4; Foo, A. (2009, November 2009). 3-5% growth tipped for 2010. The Strauts Times, p. 1. Retrieved from Newspaper SG; International Monetary Fund. (2010, July 1). Singapore: Staff report for the 2010 Article IV Consultation (p. 4). Retrieved August, 28, 2013, from IMF website: http://www.imf.org/external/pubs/ft/scr/2010/cr10226.pdf


The information in this article is valid as at 2013 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

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