What to do when recession strikes in Singapore

What to do when recession strikes in Singapore

According to The Straits Times, there have been signs of a weak economy. Private sector business activity growth is at its lowest for the past 4 months as of February this year.

However, based on the latest survey by the Singapore Commercial Credit Bureau which was released last March 1, businesses in Singapore are becoming optimistic about prospects in second quarter, especially with wholesale trade and manufacturing firms.

But will Singapore be facing bigger problems in economy for the rest of the year? Should investors need to worry about it?

According to David Kuo, a Financial Media Personality, Stock Market Analyst and Director at The Motley Fool Singapore mentioned in his article the reasons why investors shouldn’t be worried about by a possible contraction of the Singapore economy.

Firstly, Singapore’s economy has not contracted for two successive quarters yet, which is the definition of a recession. We won’t know until the preliminary numbers are available around the middle of this month. Even then, we can’t be absolutely certain of a downturn until the final numbers are announced at the end of next month. And secondly, a recession is not something that we should ever lose sleep over.

When it comes to the economy, Singapore is considered as one of the most stable and businesses need not to worry about it. Why? The Business Optimism Index (BOI) of Singapore increased from -1.22% for the first quarter of 2017 to +2.66% for the coming second quarter.

Services and wholesale trade sectors are the most optimistic of all sectors with signs of an increase in sales, profit, employment, new orders, inventories and selling price.

Here are some tips on how to prepare when recession strikes in Singapore.

Create your own emergency fund

When recession happens, chances are many Singaporeans might receive lower bonuses even if the company they are working with is not affected. Be prepared and have your own emergency fund. It should be your 3 or 6 month income.

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Invest your money

Invest on mutual funds or get an (ILP) Investment Linked Policy. However, make sure to study how to do it properly and know where your money is going.

Always look for a long term investment

When you invest your money, look for an investment that doesn’t put you in a bad situation whenever there are changes in the economy.

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Think before you decide

If there is an economic decline, decisions such as selling stocks should not be rushed. Why? It is probably too late for you to sell at this point because the economy is not good and the condition of the business is bad.

Whatever the future hold, it is best to prepare. Follow these tips to survive and secure your business.