Regardless of whether the Singapore economy skirts a technical recession this year - that is, two consecutive quarters of negative growth - what seems clear is that its slowdown is likely to be protracted, carrying over into 2020. As the Monetary Authority of Singapore's Macroeconomic Review released this week points out, the external headwinds that have caused the slowdown, especially since the second half of 2019, show few signs of letting up. Growth in the world's major economies - the United States, China, the euro zone and Japan - is projected to decline in 2019 and then further in 2020; the US-China trade dispute is still on the boil and the disruption of supply chains continues apace.
However, one reassuring sign is that the impact of these negative developments on the Singapore economy has not been broad-based. Performance has varied between different sectors, and even within sectors. For example, in manufacturing, which has borne the brunt of the slowdown so far, the trade-related cluster - particularly the electronics segment, which includes semiconductors - declined sharply, more than offsetting the relatively resilient performance of the biomedical cluster. Within the services sector, some trade-related services such as wholesale trade have performed below par, as has the retail industry. But the so-called modern services cluster, which includes segments such as information and communication technology, finance, insurance and professional services, was a key source of growth over the past two quarters. Essential services such as education, health and social services have also been resilient; tourism, as measured by visitor arrivals, has held up well; and construction activity has continued to expand. While GDP growth overall is expected to remain sluggish, these variations in performance are broadly likely to continue into 2020.