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Strong SGD may spell trouble for local workers in import sector
Weakened international demands will weigh down employment prospects.
The strengthening SGD may negatively impact the employment prospects of Singapore residents working in the import sectors, according to a study conducted by the Asia Competitiveness Institute. SGD appreciation may trigger a domino effect on international demands leading to repercussions for local workers in Singapore.
Between 2013 to 2015, SGD appreciated by almost 25% against USD, stated the study. This poses a threat to Singapore’s exports, as they may become less competitive in the local market. Consequently, international demands for Singapore’s exports will likely falter, although the extent depends on the price elasticity of demand of oversea consumers for the country’s exports.
If the demand for Singapore’s exports is elastic, the slump in exports will be significant and may have repercussions the employment prospects of local talent working in the import sectors.
On the flipside, the study asserted that local prices of imports in the country will slump, which bodes well for both expatriates and ordinary residents in the country.
Strong SGD does not have much of an impact on income and wealth of ordinary residents, however. They’re remunerated in local currency and they mostly save and invest in local assets.
Those in the upper strata who hold foreign assets might be impacted by currency appreciation, though.
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