{"id":9256,"date":"2022-06-26T11:29:36","date_gmt":"2022-06-26T03:29:36","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=9256"},"modified":"2022-06-27T09:37:48","modified_gmt":"2022-06-27T01:37:48","slug":"an-economic-slowdown-and-impending-recession-may-be-on-the-horizon-what-can-businesses-do","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/an-economic-slowdown-and-impending-recession-may-be-on-the-horizon-what-can-businesses-do\/","title":{"rendered":"An Economic Slowdown (And Impending Recession) May Be On The Horizon. What Can Businesses Do?"},"content":{"rendered":"\n

Even though the global economy seems to have only just recovered from COVID-19, a slowdown is on the horizon. In fact, PM Lee Hsien Loong had already mentioned in his May Day Rally 2022<\/a> that \u201cthere may be a recession within the next two years\u201d.<\/p>\n\n\n\n

Why The Economy May Be In Trouble<\/strong><\/h3>\n\n\n\n

Unlike the recession in 2020, which was led by COVID-19, the reason for current slowdown is not going to be as straightforward. Numerous uncertainties are plaguing the global economy right now.<\/p>\n\n\n\n

For starters, COVID-19 has not suddenly disappeared. New waves continue to rise, with Singapore also seeing rising cases in the past week.<\/p>\n\n\n\n

\"Singapore
Source: Ministry of Health (MOH)<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

Russia\u2019s invasion of Ukraine<\/a>\u00a0has also stepped-up geopolitical tensions and further disrupted supply chains for commodities, energy, as well as certain crops and vegetable oils. Worryingly, there is also news surfacing of China potentially extending military operations (with one source cited\u00a0here<\/a>).<\/p>\n\n\n\n

Commodity prices are also near the top. Oil prices is high \u2013 led by the sanctions on Russia as well as Iran and Venezuela. Gold prices are also near its all-time high. Many of us would also be familiar that gold prices tend to spike when individuals want to protect their wealth.<\/p>\n\n\n\n

Singapore, being an open economy, imports global inflation as well. In the latest Consumer Price Developments in May 2022, the inflation rate for \u201cCPI-All Items\u201d in Singapore rose 5.6%.<\/p>\n\n\n\n

\"Singapore
Source: Ministry of Trade and Industry (MTI)<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

In response, the Singapore government announced a $1.5 billion support package as we \u201cbrace ourselves for higher prices over the next few months\u201d.<\/p>\n\n\n\n

Interest rates are also being raised at the same time, mainly cited as a tool to combat rising inflation. Higher interest rates typically mean slower business growth.<\/p>\n\n\n\n

Read Also: 8 Things Singapore Businesses Need To Know About The $1.5 Billion Support Package To Provide Relief From Inflation<\/a><\/em><\/strong><\/p>\n\n\n\n

What Can Businesses Do In The Face Of Uncertainties?<\/strong><\/h3>\n\n\n\n

While no one can predict when a recession will happen, business owners have the job to steer their people and company through the current uncertainties. <\/p>\n\n\n\n

One way is to protect our cashflow<\/strong>. This is two-pronged \u2013 we need to ensure that we continue selling and collecting payments. The other aspect is cutting down on unnecessary costs.<\/p>\n\n\n\n

If we haven\u2019t been keeping on top of our receivables and payables<\/strong>, now might be a good time to undertake this exercise. The easiest way is to use our bank account that provides a free version. <\/p>\n\n\n\n

We would be able to see our best customers \u2013 whether those that pay quickly, have projects with short turnaround or have the largest projects \u2013 and choose to engage these customers more deeply<\/strong>. They will be our buffer against a poorer economy, and losing them might trigger a wave of cost cutting measures.<\/p>\n\n\n\n

On the other hand, cost cutting<\/strong> can be necessary. After a few years of doing business, it will be inevitable that you may have business expenses that are no longer useful or that you are even using. For DollarsAndSense, we see this ourselves with certain online subscriptions that we are not using that much. We also have certain subscriptions that we don\u2019t even use. This will be on the agenda to cut as soon as possible. <\/p>\n\n\n\n

Another form of cost-cutting is to streamline your staff strength. This is an exercise no business owner will look forward to. It was your decision to hire these individuals, and regardless of the reason \u2013 whether you got it wrong with trying to expand the business or want to outsource certain business functions or simply think the person is not delivering what you expected \u2013 it\u2019s going to be painful. In the news, we\u2019ve already read about many businesses cutting back on staff strength. One of the most visible ones was Elon Musk\u2019s intention to pause worldwide hiring and even cut up to 10% of jobs<\/a>. <\/p>\n\n\n\n

Read Also: Would The Great Resignation Become The Great Retrenchment?<\/a><\/em><\/strong><\/p>\n\n\n\n

A lean workforce can also act as a springboard to plan our next phase of growth<\/strong>. Existing employees, without unreasonably overworking them, should be sufficient for current operations. New employees that we intend to bring in build new capabilities or expand our existing operations.<\/p>\n\n\n\n

In the latest $1.5 billion support package, the government is also extending the Jobs Growth Incentive (JGI)<\/a> for certain more vulnerable groups of workers.<\/p>\n\n\n\n

We can also ensure that our business has access to funding and\/or credit<\/strong>, especially in the face of a slowdown or even impending recession. This can be the difference between tiding through a rough patch and becoming insolvent in the short-term (even if you are a profitable business in the longer term).<\/p>\n\n\n\n

The latest government support package also extends Enterprise Financing Scheme (EFS). The maximum loan quantum for Trade Loan<\/a> will be increased to $10 million from 1 July 2022 to 31 March 2023. The maximum loan quantum for SME Working Capital Loan<\/a> will also be increased to $500,000 from 1 October 2022 to 31 March 2023, after the Temporary Bridging Loan (TBL) Programme ends on 30 September 2022.<\/p>\n\n\n\n

Read Also: 5 Reasons SMEs Should Consider A Temporary Bridging Loan In 2022, Even If You Don\u2019t Need The Money<\/a><\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"We just exited a recession in 2020.\n","protected":false},"author":10,"featured_media":9259,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[364],"tags":[144,1030,54,219,1462,1463,440],"yoast_head":"\nAn Economic Slowdown (And Impending Recession) May Be On The Horizon. 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