Although no one really likes inflation (where you see the value of your dollar declining), deflation is a worse headache to overcome.
Deflation is a general decline in prices, according to Investopedia. It means prices of the things we buy become cheaper. It’s different from having a sale, whose purpose is usually to get rid of old or out-of-fashion stock, so that shops have more space to bring in new stock.
If Singapore goes into a period of prolonged deflation (like Japan where penny-pinching, risk aversion and death of ambition has plagued the youth), what does it mean for us?
1. I can buy more stuff in Singapore, but I have less spending power overseas
Your favourite Tokyo Banana will be even more ridiculously expensive.
2. Soon, my cost of imported food will get more expensive
Your lunches and dinners will too.
3. My festive dinner and entertainment costs will go up because my imported food prices increase
But we still need to celebrate right? Otherwise sure lose face.
4. I freak out and start to hoard my money. Less hongbaos for everyone!
Just don’t write name can already.
5. Sales decrease because people start to spend less
Try out these free things to do in Singapore.
6. Businesses start to close and people lose their jobs or earn less because everyone is spending less
Do you have at least 6 months of salary in your bank account? Don’t forget you may have housing loans, education loans etc.
7. My investments are shaky, and I cannot divest or I’ll lose even more
8. My foreign domestic worker/gardener/cleaner/foreign labour will leave to work in other countries with better exchange rates
Now Indonesian and Filipino foreign domestic workers command at least $550 a month.
9. I’m scared about losing my job.
Start creating your backup plan now and learn a new skill, just get off your butt and do it!
10. Singaporeans blame the government for everything
With so much bad news floating around, I don’t think we should be surprised if a recession is up ahead.
It’s about time to plan for yourself what to do in a recession.
Read more: The Singaporean Guide to Survive Recessions