Singapore: MAS sees ‘fits and starts’ for Singapore economy ahead with uneven growth across industries

  • Singapore’s economy is likely to continue facing headwinds into 2020, seeing lacklustre activity over the next 18 months, said the Monetary Authority of Singapore (MAS) on 30 Oct 19.
  • For now, MAS expects that a prolonged period of heightened uncertainty will keep the global economy entrenched in weakness, with firms cutting back production and delaying investment plans.
  • Growth in 2019 is expected to come in at around the midpoint of the forecast range of 0%-1%, before improving modestly in 2020.
  • Growth will be uneven across industries, with “significant uncertainties” for the trade-related cluster, the central bank added in its twice-yearly macroeconomic review.
  • Part of this stems from higher volatility in the electronics-related industries. Semiconductor producers, for example, have been seen to draw down inventories to meet new orders instead of stepping up production in view of uncertain demand.
  • Reconfigurations of regional trade flows and supply chains could pose further unpredictability for Singapore, said MAS.
  • While a downswing in the electronics cycle and US-China tensions have dragged the trade-related cluster, modern services have been the main anchor of growth, and is likely to remain a key source in 2020 – even as it sees some slowing as well.
  • Growth in modern services has been underpinned by “robust expansion of digitalisation-related activities” in the information and communications technology, as well as finance and insurance sectors, said MAS.
  • The cluster is likely to remain important amid ongoing digital transformation efforts.
  • In the financial and insurance sector, providers of credit card networks will continue to benefit from strong expansion in electronic transactions, bringing positive contribution to growth into 2020 as well, said MAS.
  • The increasing ubiquity of e-wallets and payment gateways will boost transactions, and a shift towards e-commerce platforms will further buttress demand for electronic transactions, opening doors to other growth areas.
  • But despite the fintech boost, there are some road bumps – loan growth is not expected to pick up significantly, and growth in business services is expected to ease further for the rest of the year.
  • The less favourable global and domestic environment could dampen demand for office space, while lacklustre growth in private commercial certified payments in recent months is set to continue.
  • “Even if the robust expansion of professional services persists, it would not fully offset the weakness in the larger real estate segment,” said MAS.
  • The outlook for retail remains muted, with consumer sentiment remaining susceptible to weakness in the overall economy. Further cutbacks in spending are still a possibility, said MAS.

External Link : https://www.channelnewsasia.com/news/singapore/economy-mas-sees-fits-and-starts-uneven-growth-industries-12046454

External Link : https://www.straitstimes.com/business/economy/singapore-economy-to-stay-tepid-in-2020-significant-uncertainties-for-trade-related

30-Oct-2019


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