Singapore Avoids Technical Recession with Sufficient Economic Growth
After growing slightly in the second quarter of this year, Singapore avoids technical recession by a narrow margin.
The slowdown in the second quarter was because China’s global demand weakened, impacting trade flows. Seasonally, Southeast Asia’s economy grew 0.3% (quarter-on-quarter). This was followed by a 0.4 contraction within the first three months of this year.
Until October, no change to the monetary policy is expected out of the central bank. Even though Singapore avoids technical recession this time, it is still possible that the second quarter’s final GDP figures could be revised. Recently, there have been signs of softening growth happening in China.
Fuelling Hopes for Recovery That Can Be Sustained
China fuelled hopes for a sustainable recovery in the tourism and commerce sector by reopening its economy. This was good news for Singapore because the country is so export-dependent. However, inflation and higher interest rates have strained that recovery.
The recovery is primarily thanks to the activity of the service, although barely. Economists had to cut their forecast to 1.0% from its original 1.5%. With the weakening economy and inflation slowing down, October will likely see the central bank loosening its monetary policy.
An Unexpected Turn of Events
A technical recession was not something the Government was expecting to see in May. For eight months straight, industrial export and output have fallen, signalling the possibility of a prolonged downturn.
Policy settings remained unchanged in April by the Monetary Authority of Singapore (MAS). Although inflation was still elevated during the first half of this year, core prices may moderate in the second half of the year.
On a more positive note, Singapore’s dollar and benchmark share index gained slightly.
A Business with A Future Begins with 3E Accounting
The global economy may go through ups and downs, but one constant has been how resilient Singapore’s economy has proven to be over the years. Stable, business-friendly, and easy, Singapore remains Asia’s number one choice for investors who want to start a business in this region.
For more information about company incorporation in Singapore, contact the 3E Accounting team.
