Singapore economy remains in the doldrums amid weak trade outlook

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marina-bay-sky-poolGDP growth outlook for Singapore’s export-dependent economy remains subdue owing to weak trade forecasts amid sluggish global demand., the city state’s central bank said on October 25, highlighting a bumpy road ahead as Singapore’s economy is going through a cyclical downturn and is not expected to pick up significantly next year.

“Amid a subdued outlook for GDP growth, emerging slack in the labour market and contained imported inflation, the medium-term outlook for core inflation is for it to trend gradually towards the historical average of two per cent,” the Money Authority of Singapore (MAS) said.

While MAS expects the global economy to expand at a “steady but mediocre pace” in 2017, demand remains uneven across Singapore’s key export markets. This means that trade-related sectors “will continue to struggle.”

This has been further compounded by Singapore’s exposure to sectors which have been faring especially badly, such as oil and gas, semiconductors and transport services.

The weak trade outlook means the Republic’s growth in 2017 will depend largely on its domestically-oriented industries and the services sector, MAS added. It also said that business sentiment remains negative, especially among small and medium-sized enterprises.

MAS forecasters therefore downgraded their economic projections, expecting growth in 2016 to come in at the lower end of their one to two per cent forecast, and “only slightly higher” in 2017. Growth came in largely flat in the second quarter before deteriorating in the third.

On average, GDP contracted by 2 per cent quarter on quarter in the first half year, a marked step-down from the average 3.2 per cent growth in the preceding two quarters, the central bank noted.

However, the MAS pointed out that cumulative effects of its policy easings since January 2015 will continue to provide support to economic growth and help ensure medium-term price stability. Analysis suggests that nearly 60 per cent of the effects from MAS’ past policy easing moves since 2015 have yet to be transmitted through to the economy.

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Reading Time: 2 minutes

GDP growth outlook for Singapore’s export-dependent economy remains subdue owing to weak trade forecasts amid sluggish global demand., the city state’s central bank said on October 25, highlighting a bumpy road ahead as Singapore’s economy is going through a cyclical downturn and is not expected to pick up significantly next year.

Reading Time: 2 minutes

marina-bay-sky-poolGDP growth outlook for Singapore’s export-dependent economy remains subdue owing to weak trade forecasts amid sluggish global demand., the city state’s central bank said on October 25, highlighting a bumpy road ahead as Singapore’s economy is going through a cyclical downturn and is not expected to pick up significantly next year.

“Amid a subdued outlook for GDP growth, emerging slack in the labour market and contained imported inflation, the medium-term outlook for core inflation is for it to trend gradually towards the historical average of two per cent,” the Money Authority of Singapore (MAS) said.

While MAS expects the global economy to expand at a “steady but mediocre pace” in 2017, demand remains uneven across Singapore’s key export markets. This means that trade-related sectors “will continue to struggle.”

This has been further compounded by Singapore’s exposure to sectors which have been faring especially badly, such as oil and gas, semiconductors and transport services.

The weak trade outlook means the Republic’s growth in 2017 will depend largely on its domestically-oriented industries and the services sector, MAS added. It also said that business sentiment remains negative, especially among small and medium-sized enterprises.

MAS forecasters therefore downgraded their economic projections, expecting growth in 2016 to come in at the lower end of their one to two per cent forecast, and “only slightly higher” in 2017. Growth came in largely flat in the second quarter before deteriorating in the third.

On average, GDP contracted by 2 per cent quarter on quarter in the first half year, a marked step-down from the average 3.2 per cent growth in the preceding two quarters, the central bank noted.

However, the MAS pointed out that cumulative effects of its policy easings since January 2015 will continue to provide support to economic growth and help ensure medium-term price stability. Analysis suggests that nearly 60 per cent of the effects from MAS’ past policy easing moves since 2015 have yet to be transmitted through to the economy.

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