Why It Matters

Singapore economy's lingering slowdown

The Singapore economy is having a tough year and next year is unlikely to be much better.

Economists polled in the Monetary Authority of Singapore's (MAS) latest quarterly survey expect the economy to grow 1.8 per cent for all of next year, markedly slower than their June forecast of 2.1 per cent.

The MAS survey reflects the views of 22 analysts monitoring the Singapore economy.

The environment has been challenging for a while with the world economy yet to fully recover from the financial crisis while a clear growth driver has yet to emerge as major powers like the United States and China continue to grapple with reform and recovery.

This has all had a dampening effect on global trade and by extension, Singapore's small, open economy.

The slowdown has affected not just export-dependent sectors like manufacturing, which makes up a fifth of the economy, but also service industries like finance.

Unemployment is inching up amid a cooling labour market and business has stagnated for many companies.

The economy expanded 2.1 per cent in the second quarter compared with the same period last year. But compared with the first three months of the year, growth in April to June was almost flat at 0.3 per cent.

The first six months of this year were already tough, and the economists MAS surveyed are not holding out much hope for this half to be spectacularly better.

Those polled expect modest growth of 1.8 per cent for the full year - in line with Government forecasters' expectations of 1 per cent to 2 per cent.

This is likely to be the slowest year for the Singapore economy since the aftermath of the global financial crisis in 2009.

But more troubling is the uncertainty over when the economy - and sentiment - might rebound. So far the prospects for brighter days ahead are dim.

A version of this article appeared in the print edition of The Straits Times on September 10, 2016, with the headline 'A lingering slowdown'. Print Edition | Subscribe