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Weaker ringgit, rupiah can have unpleasant effects for Singapore
Shoppers dashing to Johor or Jakarta for some bargains will be cheering the free-falling ringgit and rupiah, but the weaker neighbouring currencies can have unpleasant knock-on effects for the economy here.
Not only does it mean fewer tourists from Malaysia and Indonesia coming here and spending big, but falling currencies usually also point to wider economic problems that can spell trouble for Singapore firms trading or investing in those places.
"The greatest misconception is that the slowdown in Singapore's tourism sector is due to China's slowdown," said OCBC Bank economist Selena Ling. "But look at the numbers from the region - it's not just a China story but a regional story as well."
Arrivals from Indonesia - Singapore's single largest market for inbound tourists - were down 13.7 per cent in the first half of the year.
"The decline was due primarily to the depreciation of the rupiah to its lowest in the past 12 months, coupled with a poorer economic outlook that discouraged international travel," said Singapore Tourism Board research director Shameem Mustaffa.
Even Foreign Minister K. Shanmugam felt the need to weigh in.
"If I were to say the (Malaysian) economy wasn't doing too well, it would not be an understatement," he said in a speech to media professionals at Singapore Press Holdings yesterday.
"Singaporeans see this as a good thing, they go shopping. But in reality, when your neighbour's economy is in such a state, and your neighbour is your second-largest trading partner - investment goes both ways - it doesn't benefit us."
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Post time 27-8-2015 10:21 AM
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