SINGAPORE'S RESPONSES TO WORLD RECESSION (1973-75)

Abstract

In this academic exercise, the writer will concentrate on examining the responses of industries in the manufacturing sector and and the responses of commodities in the trade sector to the recession. There will also be a detailed discussion on the movements of export and import prices. The manufacturing sector responded to the recession in the third quarter of 1974 but recovered in the third quarter of 1975. 29 major industry groups are examined. 11 of them responded immediately to the recession in the latter half of 1974. Among these are the textiles, timber, petroleum, electrical and electronics industries. 4 industry groups responded to the recession after a lag of 2 quarters (in the first half of 1975). These included the wearing apparel, processing of jelutong and gum damar and various metal industries. Most of these industries recovered in the last three quarters of 1975. However, some industries recovered as late as the first quarter of 1976. Some industries cannot be classified as responding to the recession because there were frequent fluctuations in their output above and below trend. An example is the beverage industry. Other export-oriented industries did not respond for special factors of their own. An example is the transport equipment and oil rigs industry which did not respond because of the fulfilment of backlog orders. Domestic-based industries (cigarettes, paper, bricks, iron and steel, etc.) did not; respond to the recession. The trade sector responded to the recession in the third quarter of 1974 but recovered in the third quarter of 1975. We examine 10 commodity sections in the export sector and 10 commodity sections in the import sector. Exports of all commodity sections (except for beverages and tobacco, animal and vegetable oils and fats, machinery and transport equipment) responded immediately to the recession. Imports of all commodity sections (except for crude materials, beverages and tobacco, animal and vegetable oils and fats, machinery and transport equipment) responded immediately to the recession. An interesting phenomenon was that export and import prices of all commodity sections ( except for beverages and tobacco, machinery and transport equipment) responded to the recession by mid-1975. Most prices recovered in the latter half of 1975.