Asia's expanding economies and growing middle class are a benefit to Singapore and may help offset the threat of a trade pullback from the US, according to the Economic Development Board (EDB).
Rising cross-border trade and deals "will provide that lift for countries in this part of the world", EDB chairman Beh Swan Gin said in an interview with Bloomberg Television's Haslinda Amin. Asian countries are the biggest source of demand for Singapore's exports, helping to shelter the city state if the United States decides to cut its offshore production, he said.
"I think the US will use its huge domestic market to try and reshore some of the activities, but Singapore doesn't really participate in that part of the global supply chain," he said. "A lot of our manufacturing here is to address the needs and opportunities in Asia."
The new US administration has signalled a possible turn towards protectionism, saying it may impose taxes on some imports as it looks to force companies to move production to the US. If the US Congress passes a mooted border tax plan, Asian exports could fall by 3 to 4 per cent, reducing the growth rate in the region by 0.5 percentage point, according to estimates from Credit Suisse Group.
MEETING ASIA'S NEEDS
I think the US will use its huge domestic market to try and reshore some of the activities, but Singapore doesn't really participate in that part of the global supply chain. A lot of our manufacturing here is to address the needs and opportunities in Asia.
MR BEH SWAN GIN, chairman of the EDB.
Singapore's export industry is showing early signs of recovery, supporting growth in the trade-reliant economy. Non-oil domestic exports rose 9.4 per cent in December from a year ago, helped by a pick-up in electronics shipments. Machinery and equipment, including electronics, are Singapore's largest exports, accounting for almost half of the total. The country also exports fuel and chemical products, mostly for use in other Asian countries.