SINGAPORE (BLOOMBERG) - 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 United States, according to the city state's Economic Development Board (EDB).
Rising cross-border trade and deals "will provide that lift for countries in this part of the world," Mr Beh Swan Gin, chairman of the EDB, 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 US decides to cut its offshore production, he said.
"I think the US will use its huge domestic market to try and reshore back 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 signaled a possible turn toward 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 3 per cent to 4 per cent, reducing the growth rate in the region by 0.5 percentage point, according to estimates from Credit Suisse Group AG.
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 electronic 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.