SINGAPORE - The gloom blanketing Singapore's economy is likely to deepen this year as global growth remains subdued, according to the country's central bank.
In its twice-yearly Macroeconomic Review released on Wednesday (April 27), the Monetary Authority of Singapore (MAS) said negative business sentiment has become more pervasive and unemployment is expected to rise this year even as wage growth slows.
However, signs of weakening business activity remain confined to certain industries and the slowdown is not as dire as it was during the global financial crisis, the MAS said.
The central bank said the Singapore economy has been on a "three-speed trajectory" in recent years.
Over the last few years, the modern services cluster has expanded strongly, while domestic-oriented activities have been on a relatively slow, but steady, uptrend. However, trade-related industries have stagnated as Singapore's small open economy has been hit by lacklustre global demand.
The outlook for Singapore's key trading partners, such as the US and Japan, has weakened discernibly this year and this means the Singapore economy will likely see "a protracted period of modest growth" in the quarters ahead, said MAS.
The weak climate stems in part from a global growth pullback in the manufacturing sector since the global financial crisis.
MAS also noted that business sentiment has worsened this year, though the bulk of lay-offs in the last few quarters has been largely contained within trade-related industries such as electronics and precision engineering, as well as wholesale trade.
With lower labour demand and supply, total job creation this year is expected to stay modest. As such, overall and resident unemployment rates are likely to rise slightly this year, said the MAS.
Redundancies could also continue to rise in sectors facing weak external demand and undergoing restructuring, it said.