SINGAPORE - Singapore's small, trade-dependent economy is going through a cyclical downturn and is not expected to pick up significantly next year, the country's central bank said.
The global economy is expected to expand at a "steady but mediocre pace" in 2017 and on the back of this, demand remains uneven across Singapore's key export markets. This means trade-related sectors will continue to struggle, the Monetary Authority of Singapore (MAS) said in its twice-yearly Macroeconomic Review released on Tuesday (Oct 25).
This has been further compounded by Singapore's exposure to sectors which have been faring especially badly, such as oil and gas, semiconductors and transport services.
The weak trade outlook means the Republic's growth in 2017 will depend largely on its domestically-oriented industries and the services sector, MAS added.
The central bank also said that business sentiment remains negative, especially among small and medium-sized enterprises.
MAS forecasters downgraded their economic projections, expecting growth in 2016 to come in at the lower end of their 1 to 2 per cent forecast, and "only slightly higher" in 2017.
Said the MAS: "The domestic economy has slowed discernibly since the last Review. Growth came in largely flat in Q2 before deteriorating in Q3."
On average, GDP contracted by 2 per cent quarter on quarter in the last half year, a marked step-down from the average 3.2 per cent growth in the preceding two quarters, the central bank noted.
The Review also noted that global growth is expected to come in at 3.7 per cent this year, and edge up slightly to 3.8 per cent next year, as business investment in major economies stay sluggish due to elevated economic uncertainty.
The outlook for Asia is stable but will be "sub-par" compared with the period before the global financial crisis, MAS said.