Economic activity in Singapore is likely to stay lacklustre over the next 18 months, with wages expected to grow slower this year and the next.
The trade-related cluster faces "significant uncertainties" as well, with industries in the electronics space seeing higher volatility in recent months.
Regional trade flows and supply chains are also being reconfigured, adding to the uncertainty, said the Monetary Authority of Singapore (MAS) in its biannual macroeconomic review yesterday.
Economists, however, see some light at the end of the tunnel.
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said slow growth is expected to persist into next year, with the biggest risks remaining the United States-China trade, tech and currency tensions, China's slowdown and dampened demand.
But the Republic is likely to escape a technical recession - two consecutive quarters of quarterly decline - and also a full-year recession if global growth stabilises late next year.
She said a full-year recession this year is "highly unlikely", unless there is a very sharp drop in fourth-quarter growth.
DBS senior economist Irvin Seah said high-frequency data suggests that an uptick is on its way, with "the worst of the current growth cycle already behind us". For example, global semiconductor shipments, in absolute dollar value, are rising month on month, he said. But tepid growth is likely to persist into mid-2020, with the lack of a "forceful positive catalyst" in the global environment.
Still, with fears of a no-deal Brexit receding and a glimmer of hope in US-China talks, risk factors appear to be dissipating. Maybank Kim Eng economist Chua Hak Bin said firms have held back on capital expenditure and pent-up demand could help trade volumes recover if there is progress on a US-China trade deal.
For now, the MAS expects that heightened uncertainty will keep the global economy weak. Already, growth here has slowed to 0.1 per cent from a year ago in the second and third quarters. Full-year growth is expected to be around the midpoint of the forecast range of zero to 1 per cent, before improving modestly next year.
The softening labour market is expected to reduce the pace of wage growth this year and next, said MAS. Hiring sentiment has also turned cautious, with fewer vacancies than unemployed persons.
With the MAS already easing monetary policy, Mr Seah expects fiscal support to remain on the cards for Budget 2020. "The Government has a huge chest of ammunition, or fiscal room, to manoeuvre," he said, noting that the accumulated surplus for the current term of government stands at a conservative estimate of $15.6 billion.
But he expects any move to remain targeted rather than broad-based.
The MAS noted yesterday: "Overall, the weakness has largely been contained within the electronics-related segments."
Barclays economist Brian Tan said that the prospects for another monetary policy easing will hinge on whether the outlook for next year's growth disappoints, and whether the service sector proves to be as resilient as the MAS hopes.
Modern services, supported by digitalisation-related activities, are likely to remain a key source of growth next year.
But there are some road bumps - loan growth is not expected to pick up significantly, and growth in business services is expected to ease.
The recovery of the construction sector, with a "healthy pipeline" of projects, is set to continue.
The outlook on retail remains muted, with more spending cutbacks on the cards, said MAS.
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