The Singapore economy grew by a mere 0.7% in 2019, which is a significant drop from the 3.1 per cent growth in the previous year. Despite this slowdown, the flash estimates produced by the Ministry of Trade and Industry (MTI) on 2 Jan 2019 suggest that there are hints of future growth from Q4 of the previous year.
In particular, the gross domestic product (GDP) in Q4 was 0.8 per cent higher than that of Q4 of the previous year while also being higher than the Q3 of the same year at 0.7 per cent. This Q4 estimate utilised the data from the first two months, and is similar to the forecast by produced by Reuters.
The quarter-on-quarter seasonally adjusted annualised basis showed that growth is at 0.1 per cent, which is below economists’ forecasts at 0.4 per cent as well as lower than the 2.4 per cent growth experienced in the past quarter.
That Singapore is heavily dependent on export and trade means that it suffers from the business cycle contraction in the electronics industry alongside the prolonged trade war between China and US.
After three revisions of growth forecasts by policymakers, the flash estimate released on 1 January 2019 now sit between the forecast range of 0.5-1 per cent.
Prime Minister Lee Hsien Loong, in his New Year greeting, stated that the country has taken some damage from the global economic contraction. The economy is still growing although “less vigorously than we would like” and there is no risk of recession in the foreseeable future.
A similar sentiment was also echoed by People’s Action Party first assistant secretary-general and Finance Minister, Heng Swee Keat in his New Year greeting regarding the increasing global uncertainty and slower economic growth.
Mr Heng who is also the Deputy Prime Minister, further stressed that “We are looking at measures to tackle these, even as we build for the longer term.”
The incoming Singapore Budget 2020 which is slated to be delivered on 18 February 2020 by Mr Heng will have some policy provisions for both businesses and households alike. In particular, policies will be introduced to alleviate high living costs for households and social safety nets that insulate the vulnerable, the poor and the elderly in society against economic shocks.
In addition to this, policies for improving the productivity of firms and for the retraining of workers. Workers such mid-career PMETs-professionals, managers, executives and technicians will undergo training which will better equip them with new skills that will allow them to remain employable at the current job or find new jobs elsewhere.
