The world economy seems finally to be taking a turn for the better after years of languishing in a slump.
While this is good news for trade-dependent Singapore, it might not immediately translate into stronger growth or more job creation across all sectors. This is because the dip in the global economic cycle only partly accounted for tepid growth rates in many sectors here. Deeper structural issues - which are tougher to resolve and will take a longer time to work through - have also had a role to play.
While some manufacturing segments are benefiting from the improving global economy, the outlook for Singapore remains cautious, the Monetary Authority of Singapore (MAS) said.
It noted in its latest biannual Macroeconomic Review that growth has picked up but in a "volatile and uneven" manner. Trade-related sectors, especially electronics manufacturing, have enjoyed a significant turnaround. But other sectors which rely largely on local demand continue to struggle.
These include retail and food services, which are facing both cyclical and structural challenges amid a soft labour market and subdued consumer confidence, as well as greater competitive pressures, the MAS report said.
The fact that growth is not yet picking up across the board was borne out in preliminary labour-market statistics released yesterday by the Manpower Ministry. The data showed the overall unemployment rate edged up to 2.3 per cent in the first quarter, rising to rates last seen in the fourth quarter of 2009 following the global financial crisis.
It will take more than stronger global growth to drive a turnaround in the job market, where retrenchments have risen on the back of disruptive technologies. Some sectors are also undergoing fundamental changes and challenges will persist even if economic growth picks up.
These longer-term factors mean it might be some time before the effects of improving global economic growth are felt across the broader economy.