Global economy heading where?
I enjoy listening to him speak not so much because his analysis was spot on (economists rarely are anyway!) but more on how he derived his conclusions and also because of his extremely candid takes on the economy using non-traditional statistics. Not forgetting, his spluttering of dialectal slang.
Here are a few key takeaways just for sharing. As usual, it's up to you to decide if you wish to buy it or not:
- The world economy is projected to grow at a slower pace, and as Song has said, there is really no need for the likes of the World Bank nor the IMF to downgrade growth forecasts for us to know so. Although global growth is muted in 2016, Song feels "excited" in the years beyond for Asia as a whole because of the implementation of Trans-Pacific Partnership and China-led Asian Infrastructure Investment Bank.
- Generally, it's the services sector that is holding up growth. In fact for Singapore, services sector helped it avert ("siam") a recession as the manufacturing sector has effectively been in a recession for the past one year or so.
- For the US economy, he says he can understand why Yellen is cautious for a rate hike simply because the last hike was as far as 2006. Song personally feels a hike is necessary because the almost zero rate now has a long way to go before reaching the normal interest rate of 3 percent. Even raising by 25 basis points is still effectively zero rates anyway. The next data to watch for is whether there is broad-based job recovery. If so, he wishes that Yellen will hike the rate in December, having lost the opportunity to do so in September when she was side-tracked by China issues.
- For China, Song is a little more upbeat than headline consensus. He believes that China will continue to thrive largely based on its growing services sector and doesn't foresee any hard landing, barring major (really major) catastrophe e.g. "sinking of California bay" type. He also believes that growth or no growth, the number one priority of the Chinese government is job creation and in this respect, figures are pointing to a pretty ok result.
- For Singapore, he was quite pessimistic about the property sector, saying that those who want to sell better "hurry, hurry" while those who want to buy have "no hurry". Song feels that the Singapore government is also "in no hurry" to revise policies because prices have only fallen by about 10 percent.
Next to look out for is the year-end festive orders data for the various countries to be released in November. That should give some more direction on consumer confidence.