For all the gloom and doom in our newspapers, Singapore isn’t in a recession…technical or otherwise.
Today, the Ministry of Trade and Industry revised forecasts of our full-year growth in 2015 at “close to 2 percent”. This is reduced from an earlier forecast of between 2 and 2.5 percent in August this year.
Our third quarter growth figures show the economy growing at 1.9% – which is higher than an earlier estimate of 1.4%.
This growth had been supported mainly by the services industries. Manufacturing, once a strong pillar of our economy, continues to weaken. Today manufacturing makes up a fifth of Singapore’s economy. It contracted 6.2% over the same quarter a year ago.
Although the global economy is expected to improve next year, MTI says this would have little impact on Singapore.
MTI said the growth outlook for Singapore remains “modest” going into 2016, with the economy forecast to expand between 1 and 3 per cent next year. Which is quite a useless forecast because our economy had been growing at between 1 and 3 percent for a number of years anyway.
Internationally, global growth is forecasted to improve next year as developed economies such as the United States and euro zone continue to pick up pace, MTI said.
So what does this all mean for us?
There had been a few scares this year: the Greek crisis for example. However, the problem with Greece could really be an Eurozone problem and isolated within their borders.
Another scare was China’s slowing growth. Their economy moderated further on the back of on-going efforts to rebalance themselves away from industrial production and investment driven growth towards services and consumption-driven growth. This means they’re recalibrating to boost their internal markets – which means they will be buying less from us.
These could have contributed to a general dip in our growth. There were declines and some retrenchments this year and this made worries of going into technical recession very real.
Yet our healthy results show that Singapore has combated these shocks pretty well.
Looking ahead to 2016, the US economy is likely to grow at a faster pace, supported by domestic demand. The pace of growth in the Eurozone is projected to be similar to that in 2015. Improving business and consumer sentiments, along with continued monetary easing arising from the quantitative easing measures implemented are expected to support domestic demand in that region.
For us however, this might not translate into a significant lift for Singapore and our regional neighbours.
China’s slowing growth, the services-driven nature of growth in the US, and the trend of in-sourcing in China and the US will dampen external demand for Singapore’s exports.
For now, it appears that we do not have to worry (that much) about going into full-scale retrenchment and budget tightening, we do however, have to continue to practise fiscal prudence.
For those of us in the industries or businesses that aren’t doing so well, it might be good to pay attention the government’s efforts in SkillsFuture training. Diversify your skills and protect your personal finances against the unpredictable markets.
But at least for now, we’ll have a reassuring Christmas and New Year.