Howard's End: Economic Ilitrisee

At the same time that Finance Minister, Dr Michael Cullen was calling Singapore "one of Asia's shining stars", Singapore became the first Southeast Asian country to officially slip into recession. Somebody on his staff should be sacked for this speech because New Zealand now looks out of touch and stupid. Maree Howard writes.

Addressing the Singapore/New Zealand Business Council in Singapore Wednesday, Dr Cullen said, "Singapore is one of Asia's shining stars."

I'm sitting down here on the West Coast and yet I've known what was happening in Asia. So why didn't Dr Cullen, with his highly expensive resources, receive proper advice before he was allowed to put his foot in his mouth in Singapore and make all of us Kiwi's look like a bunch of out-of-touch country hicks to the international financial community?

Political speeches today, particularly by Finance Ministers, aren't just for local consumption - they are instantly telegraphed around the world.

Dr Cullen should have known that concerns have been mounting about Singapore in the international financial community for months.

But, on Tuesday, the Singaporean government finally officially reported that their economy shrank at an annual rate of 10.1 percent in the second quarter from the first. That followed an 11 percent annual decline in the first quarter.

Worse, other Southeast Asia nations are expected to echo Singapore when they announce their second-quarter data in coming days. Thailand, Taiwan and the Philippines have already reported that their economies shrank in the first quarter and the second quarter results are now due out.

A recession is typically defined as two back-to-back quarters of contraction in gross domestic product.

Analysts are now debating whether the growing gloom could push the fragile world economy into a full-blown recession.

Germany also added to the woes on Tuesday when its growth forecast was slashed. Its growth outlook, Europe's largest economy, is predicted to be just 1 percent. Earlier its growth was predicted to be 2.1 percent this year.

The IMF also revised its growth forecast for Germany down to 1.25 percent - from its earlier 1.9 percent forecast.

Currencies in Central Europe and South Africa have also suffered in recent days from crisis in Argentina and Turkey. And Brazil is also suffering because of Argentina.

The latest batch of gloomy figures comes as financial turmoil is rippling through several other emerging nations and Japan looks highly likely to remain a basket case for some time yet.

I hope the risk of global economic crisis is limited for now and at the G8 meeting later this month world leaders might finally get off their collective butts and wake up and smell the coffee.

As for Dr Cullen, I resent New Zealanders being insulted by political speeches which are nothing but spin. He should get some new advisors or, at least, a new speech writer who can keep up with the play.

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