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Singapore to see sharpest GDP slowdown in Southeast Asia this year: report

Janet Ong
Finance Editor
Singapore's central business district skyline. (PHOTO: Reuters)

SINGAPORE — Singapore is expected to experience the sharpest economic slowdown in Southeast Asia, with growth slowing to 1.9 per cent this year from 3.1 per cent last year, according to a report released on Tuesday.

As an open economy with that is heavily dependent on exports, Singapore will likely be most adversely affected by weaker external conditions, said the report by the Institute of Chartered Accountants in England and Wales (ICAEW).

The ICAEW’s forecast is within the range of the Ministry of Trade and Industry's (MTI) revised forecast for Singapore’s economic growth at 1.5 per cent to 2.5 per cent compared with 1.5 per cent to 3.5 per cent previously. The MTI said in May that its latest forecast was due to the weaker external demand outlook and global economic uncertainties.

Singapore’s economy is feeling the impact of renewed trade tensions between the US and China amid a challenging export environment in the region, said Mark Billington, ICAEW regional director for South-east Asia, in the report.

“With its links to China and dependence on exports, we expect Singapore to experience the sharpest slowdown in GDP growth across the region, with its economy likely to dip into recession in 2020 should external conditions further deteriorate,” Billington added.

Domestic demand in Singapore is expected to offset weaker export growth and be supported by possible easier monetary policy across the region.

The outlook for Singapore’s construction sector excluding the residential segment over the next 18 months is positive due to continued recovery in non-residential construction and ongoing public infrastructure projects.

However, businesses are likely to be cautious, resulting in “more subdued” investments in machinery and equipment.

With the challenging export outlook and a benign inflationary environment, the Monetary Authority of Singapore is expected to remove some of last year’s appreciation bias for the Singapore dollar versus a trade weighted basket of currencies. The US dollar/Singapore dollar is forecast to trade around 1.37 at the end of 2019.

On Southeast Asia’s outlook, the ICAEW expects regional growth to slow to 4.8 per cent this year from 5.3 per cent last year, and 4.7 per cent in 2020.

“We expect exports and overall economic growth to continue to come under further pressure, as the re-escalation of trade tensions between US and China is unlikely to ease any time soon,” said Sian Fenner, ICAEW’s economic advisor and Oxford Economics’ lead Asia economist.

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