Slower economic growth in Singapore due to decrease in export demand and overall “weaker global trade growth”: GECS Q4 2018 report by ACCA and IMA

Slower economic growth in Singapore due to decrease in export demand and overall “weaker global trade growth”: GECS Q4 2018 report by ACCA and IMA

Economic growth in Singapore – one of the two “most trade-dependent economies in the Asia Pacific region” besides Hong Kong – is slowing as the demand for exports fell in Q4 last year, according to the latest edition of Global Economic Conditions (GECS), based on the ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants).

The slowing down of economic growth in both countries, the report added, is a result of overall global trade growth.

Consequently, it observed that “the outlook for both economies is dominated by global economic prospects, which have deteriorated in recent months”, adding: “Confidence levels in both countries now reflect this less positive picture”.

The GECS report further projected that “growth this year is likely to be less than 3% for both [Singapore and Hong Kong], especially if the Chinese economy continues to slow and US-China trade tensions are unresolved”.

However, it noted that “tightening pressure” in both countries, in which “policy is conducted through means of an exchange rate target”, can be alleviated through “reduced expectations of the degree of monetary tightening by the US Federal Reserve this year”.

The GECS report also found that “real estate markets in both economies faced significant headwinds from higher interest rates” in 2018.

“The new orders sub-component for both Hong Kong and Singapore also points to a difficult economic picture in the first half of 2019,” it predicted.

Two of the trade-dependent Asia Pacific economies to slow down in 2019, namely Singapore and Hong Kong. Source: Global Economic Conditions Survey

Globally, other data from the GECS Q4 2018 report demonstrated, among others, the following findings:

  • Rising costs is on the top of the list of issues that respondents to the survey are apprehensive about, with 55% citing this as a significant issue;
  • 47% of respondents contemplate retrenching their staff members, and 18% are considering hiring new employees; and
  • 39% of respondents are “considering scaling back investment in new capital projects”, compared with just 16% who are “looking to increase investment in new projects”.

Head of Business Insights at ACCA Narayanan Vaidyanathan commented on the report’s findings: “Economic confidence over 2018 has been turbulent, with end of calendar year results downbeat compared to the start of 2018.

“It’s been interesting to look back at the GECS from the start of 2018, when we recorded economic confidence at its highest since the first survey was issued assessing Q1 2009.

“Last year was clearly a roller-coaster ride and the outlook for 2019 is also uncertain,” he added.

IMA vice president of Research and Policy Raef Lawson said: “The US’s economic confidence is now at an all-time low with signs that domestic demand is starting to slow, owing to a combination of higher interest rates and the waning impact of the recent fiscal stimulus. But the jobs market remains extremely buoyant which will underpin robust consumer spending in coming months.

“Despite this, we do not envisage a recession in the States despite confidence declining and trade tensions with China continuing. Looking ahead, we believe that global growth to hold up above 3% this year,” he assured.

The full GECS report for Q4 2018 can be accessed here.

Notify of
Inline Feedbacks
View all comments