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Singapore economy: Five things to watch in 2019

A Panamax crane loads a 40-foot shipping container onto a container ship at the Port of Savannah in Savannah, Ga. (Photo: AP Photo/Stephen B. Morton)

By Dionne Thompson

Singapore is due for a bumpy 2019, with the US-China trade war threatening to derail the global economy. We spoke to economists Carmen Lee from OCBC, Lim Siew Khee from CGS-CIMB and Janice Chua from DBS for trends that could affect you.

  1. Global trade winds: All eyes are on the US-China trade war, which is showing every sign of becoming a protracted spat. Economists expect this to be the single biggest risk factor to Singapore’s economic health in 2019, and project that gross domestic product (GDP) growth could ease to 2.6% from an estimated 3.3% for 2018. US-China tension may continue for the next five to ten years, they say, but there is a silver lining: Singapore could benefit from a potential re-alignment of global supply chains.
Federal Reserve Board Chairman Jerome Powell speaks during his news conference after a Federal Open Market Committee meeting in Washington, U.S. (REUTERS/Yuri Gripas)

2. Fed Rate cliffhanger: Also shaping up to be a cliffhanger is whether the US Federal Reserve will ease off on interest rate hikes in 2019, and by how much. Economists are divided as to how many times the Fed will raise interest rates. These movements have an impact on Singapore’s lending rates, particularly for mortgages. In an indication of just how uncertain the global outlook is, some economists are also looking at the possibility of a Fed rate cut.


High-rise and low-rise apartment blocks consisting of private and public housing are seen in Tiong Bahru. (Photo: REUTERS/Kevin Lam)

3. Property moves: A slowdown in interest rate hikes will ease the pressure on mortgages as well as on holding costs for property developers. Many economists expect the property cooling measures introduced in July to stay in place. What is of interest is whether property prices will rise or fall, and by how much. Economists’ predictions range from a up to 3 per cent rise in private home prices to a up to 3 per cent fall in home prices in general. A Fed rate cut could, however, heat up the Singapore property market again.


Go-Jek drivers wait for customers in Jakarta, Indonesia. (AP Photo/Achmad Ibrahim)

4.  Go-Jek vs. Grab: A three-way fight may be in the offing with Go-Jek’s entry into Singapore’s private car hire market. Grab’s entry in 2013 challenged ComfortDelgro’s dominance in the market. Go-Jek’s entry in November changes the game yet again. It is expected to grow its supply of drivers, in part by raiding those under Grab and ComfortDelgro. Economists expect ComfortDelgro to be gearing up for a fight, having already suffered an exodus of drivers to Grab. Until the dust settles, Singaporeans can expect cheaper rides.


Singapore’s Prime Minister Lee Hsien Loong smiles during the Closing Ceremony of the ASEAN Summit and Related Summit in Singapore, November 15, 2018. REUTERS/Edgar Su)

5. Pre-election goodies: Singapore Prime Minister Lee Hsien Loong has said that a general election in 2019 is “possible”, firing up popular hope that the government will prepare the ground with pre-election goodies. This could take the form of cash handouts, such as the growth dividends given out in the last two election-year budgets. Handouts could also be part of Singapore’s bicentennial celebrations: the 200th year since Stamford Raffles arrived.