By Alvin Foo

JUST a year ago, local entrepreneur Chesper Pang's company was enjoying annual profits of up to $250,000.

Today, Mr Pang is fighting for survival. Business has halved, and he has had to cut salaries and lay off staff.

He is bracing himself for more drastic measures if things do not improve, including folding the legal consultancy he set up three years ago.

Indeed, economic gloom, plummeting share and property prices, pay cuts and the prospect of job losses had seemed like a remote outcome for Singapore a year ago.

Not any more.

Although the eye of the financial storm is thousands of kilometres away in the United States where the sub-prime mortgage crisis last year started the toxic ball rolling, experts say the fallout will filter down to Singapore.

If they are not feeling the effects now, they most certainly will in the months to come. After all, Singapore - like Ireland, New Zealand and Denmark - is already in a technical recession.

In fact, some Singaporeans have already been burnt.

Almost 10,000 retail investors here bought products linked to now-bankrupt US investment bank Lehman Brothers amounting to $501 million. They may not get their money back.

Prime Minister Lee Hsien Loong told Singaporeans to 'prepare for a rough ride at least over the next year, and quite possibly longer'.

The Government lowered the official forecast for full-year growth again earlier this month. It now expects the economy to grow at 'around 3 per cent' this year, down from 4 to 5 per cent. The original prediction was 4.5 to 6.5 per cent growth.

The situation could worsen.

Economists warn that the real recession, which usually entails job losses, will probably come next year when Singapore bears the full brunt of the global economic slowdown.

Plunging stock market prices can be expected to lead to slumping property prices and less luxury retail spending, as Singaporeans feel their wealth diminishing.

Just imagine. The Straits Times Index hit the dizzy heights of 3,831 points in October last year.

Now it has sunk as much as 50 per cent, which means that investors have lost almost a dollar for every $2 they put into the market since last October.

UBS strategist Nizam Idris says: 'The market has been too volatile for me to even surface for air. I've not seen anything like this in the 13 years that I've been working in this industry.'

The experts warn that there could be more pain ahead.

The stock market retreat has started to filter through to property.

En bloc fever is history, and the once red-hot property market is cooling rapidly.

Prices of private homes have fallen for the first time in 4-1/2 years, marking an end to the property boom which began in 2004.

And prices are likely to keep heading south well into next year, squeezed by continuing financial turbulence and a looming global recession, say property consultants.

Businesses will not be spared as banks impose more stringent credit controls and corporate Singapore's bottom lines are burnt by a global downturn.

Globally, the International Monetary Fund has called this crisis 'the largest financial shock since the Great Depression'.

Thus, CIMB-GK economist Song Seng Wun urges Singaporeans, especially the younger ones, to start bracing themselves for tougher times.

He says: 'It may look relatively calm here now, but the wind of change might be blowing strongly soon. Make preparations, but there's no need to be overly pessimistic. If you spend within your means, you'll always be able to ride through.'

Companies are likely to cull expansion plans and be more selective in hiring.

Mr James Mendes, the Asia-Pacific managing director for HR firm Alexander Mann Solutions, says that three out of every four companies he spoke to in Singapore had turned 'more conservative in their hiring forecast' than they were three to six months ago.

HR consultant Cindy Ong has warned that variable bonuses are expected to plunge by 50 to 70 per cent this year, and 'below average performers' may be left out.

She advises Singaporeans to consider switching to the hospitality and luxury retail sectors, as both are set to boom next year because of the integrated resorts.

Ms Ong adds: 'Banks have frozen head counts, but the service and hotel sectors are still recruiting aggressively. It's now an employers' market; they are more stringent in hiring.'

In the face of such bleakness, financial advisers have one tip for Singaporeans: prudence.

'Cash is king during a crisis,' says financial planner Mic Tan. 'Emergency savings should not be used on impulsive spending and luxury goods.'

She advises Singaporeans, especially those with children, to 'set aside at least six months of gross income for emergency savings in case they lose their jobs'.

But it is not all gloom and doom.

There are silver linings amid the dark clouds in the form of food and oil prices coming off record highs.

The price of black gold has sunk by more than half to about US$70 a barrel since hitting a peak of US$148 in July.

Global prices of wheat, oil, sugar and other essentials began tumbling in June, and their trickle-down effects will be felt by Singapore consumers in the next few weeks.

Importers and analysts say the prices are off their peaks for good, and stability has returned to the market.

Prices are poised to fall further before levelling out, though they are unlikely to be as low as a year ago.

Industry players have urged the public not to panic, noting that when things hit rock bottom, they have nowhere to go but up.

Mr Song says: 'The best time to pick up anything is during a recession, it's like a once-in-a-lifetime investment opportunity, but remember to invest with spare resources, not with credit.'

5 safe things to do with your bonus

MANY Singaporeans will still be receiving a bonus soon as last year was a good year. However, as times are expected to get more trying, experts advise against extravagant spending. Instead:

1 Put your bonus in short-term fixed deposits if you don't know what to do with it. Avoid structured products and foreign exchange risk.

2 Save it up to buy a property when the market is expected to cool off further next year.

3 Invest it in battered blue chips or unit trusts with a long-term view. The downside is limited now compared to the upside.

4 Go for a shorter holiday, if you've already budgeted for a year-end vacation.

5 Spend it on skills upgrading or post-graduate education.

This article was first published in The Straits Times on Oct 18, 2008.