Economy slips into technical recession
by Fiona Chan

SINGAPORE is in a technical recession after the economy slipped into negative territory for the second quarter in a row, dragged down by a slump in exports and a weak property market.

But the real recession, which usually portends job losses, will probably come next year when the Republic feels the full impact of the global economic slowdown, warned economists.

Many have lowered their growth forecasts and are now tipping 0 to 3 per cent growth next year.

A TECHNICAL recession is defined as two consecutive quarters in which the economy has shrunk compared to the previous quarter.

The size of the economy is measured in terms of the total value of goods and services produced in a country, also known as its gross domestic product, or GDP.

Generally, the duration of a recession is the full period of the business cycle that economic activity is in decline.

MAS shifts monetary policy to neutral
by Robin Chan

SINGAPORE has followed economies around the world by easing its monetary policy amid slowing global growth and turbulent financial markets.

In a move widely expected by analysts, the Monetary Authority of Singapore (MAS) shifted to a neutral exchange rate policy stance yesterday for the first time since April 2004.

The move came on the day Singapore sunk into a technical recession.

US guarantee for bank debt under study

WASHINGTON: The United States government is weighing two dramatic steps to unfreeze bank lending and staunch massive losses in stock markets: guaranteeing billions of dollars in bank debt and temporarily insuring all US bank deposits, the Wall Street Journal reported yesterday.

US officials downplayed expectations of any announcement this weekend. But as the crisis deepens and stocks continue to tumble, pressure is building on the Bush administration to find a solution that goes beyond the US$700 billion (S$1 trillion) financial rescue plan recently signed into law.

Having the US government back bank lending would effectively entail it being the backstop for the country's financial system.

STI falls below 2,000 as global stocks dive
by Goh Eng Yeow

GLOBAL stock markets dissolved into panic-fuelled chaos yesterday, following on another precipitous late sell-off on Wall Street.

No market was spared, from London to Sydney, amid growing fears that historic interventions by governments around the globe were unable to rein in the market freefall. For the first time in almost five years, the Straits Times Index (STI) fell below 2,000 points.

A fresh source of alarm confronting investors yesterday: worries that another Wall Street investment bank - Morgan Stanley - might be on the brink of collapse. Its share price halved in just two days as the cost of insuring its debt against default rose sharply. A crisis at Morgan Stanley would send fresh shockwaves through the reeling financial system, coming after the collapse of Wall Street giant Lehman Brothers last month.

'Market's a joke' but no one's laughing
by Francis Chan

WITH the Straits Times Index (STI) closing below 2,000 points for the first time in almost five years yesterday, no one could really expect sober assessments from investors and brokers.

'The stock market's a joke,' said one investor, outside OCBC Securities' customer service centre at Church Street.

'If you went into it during yesterday's mini-rebound, you'd be dead meat today. I am staying out.'