Singapore’s economy grew by just 0.7 per cent during 2019 as the US-China trade war disrupted the financial hub along with a cyclical global downturn in the electronics sector.
The Lion City, which is about half the size of Houston, narrowly avoided entering a recession in the third quarter and its trade ministry said today (Thursday) that the economy expanded by 0.8 per cent year-on-year in Q4 2019.
Singapore is the world’s second-fastest ageing society after South Korea, according to the United Nations.
Singapore reported a 3.2 per cent expansion in 2018.
Across 2019, Singapore’s manufacturing sector contracted by 1.5 per cent year-on-year, sharply down from its 7 per cent expansion in 2018. Services grew by 1.1 per cent compared to 2.9 per cent in 2018. Construction, however, expanded 2.5 per cent compared with a 3.7 per cent contraction in 2018.
“This marks the worst growth performance for Singapore since the global financial crisis [in 2009],” said DBS Bank economist Irvin Seah.
“Despite the lacklustre growth performance, the economy is slowly getting out of the woods [amid] emerging signs of bottoming in the external environment.
“Barring any unforeseen negative shocks, growth momentum is expected to pick up gradually in the coming quarters,” Seah said.
Donald Trump’s announcement this week that he would sign a partial trade deal with China in February has sparked confidence in global trade this year.
Singapore is expected to announce its annual budget on February 18 and hold a general election within months. Electoral sweeteners are expected to be announced in the budget.
Prime Minister Lee Hsien Loong said in his New Year’s Day message that the budget would contain support for employers and staff, as well as measures to help residents cope with living costs.
“The global economic slowdown has already affected us. This year we avoided a recession. Our economy is still growing, but less vigorously than we would like,” said Lee, the world leader with the highest official annual wage of US$1.7 million.
“We must resist the temptation to turn inwards,” Lee said, adding that Singapore benefited enormously from globalisation.
“Everywhere globalisation seems to be in retreat [but] a Singapore turned inwards cannot survive.”
Singapore’s government is hopeful that global trade will pick up again during 2020. Picture credit: Wikimedia
