Some simple arithmetic on Singapore's population Two hundred thousand foreigners and permanent residents (PRs) might leave Singapore during 2009-10, reducing its population by around 160K to 4.68mn. The potential drop in employment and population would have far-reaching implications for the economy. Private consumption could contract in both 2009 and 2010, the unemployment rate could reach 5.6% in 2010, and residential property prices could drop by over 40% from their peak in 2008. ? The size and speed of Singapore's recent population increase, including foreigners and PRs, has been unprecedented according to census data going back 1982. From mid-2003 to mid-2008, Singapore's population surged 725K (18%) to 4.84mn. Over 75% of that population increase was attributable to a 547K (48%) jump in foreigners and PRs. ? Foreigners and PRs came to Singapore to fill new jobs. We estimate that they filled 485K or 61% of the 796K new jobs created during 2004 to Q3 2008. ? We think the economic recession will lead to sizable job losses and potentially drive as many as 200K foreigners and PRs out of Singapore. That in turn could reduce the country's population by up to 160K during 2009-10. ? Government actions, including the supplementary budget to be revealed on 22 January, are unlikely to materially change our conclusions on job and population losses. The government so far has announced measures that provide less than 1% of GDP of fiscal stimulus and has ruled out measures to support the property sector and cuts in the Government Sales Tax and in CPF contribution rates. ? This analysis suggests that Singapore is highly exposed to second-round effects that could deepen the recession in 2009 and mute the recovery in 2010. There are sizable downside risks ? around 1-2pp ? to our real GDP growth forecasts of -2.8% for 2009 and 3% for 2010.
