Singapore GDP Expected To Recover in 2020
While the economic growth in 2019 was in line with the economists’ expectations, it is the worst showing in 10 years. This leaves room for doubt as to the extent of recovery that 2020 could bring. Singapore’s GDP in 2019 was 0.7 per cent according to estimates.
The Monetary Authority of Singapore (MAS) is expected to maintain the Singapore dollar nominal effective exchange rate (S$NEER) slope. In 2020, the economy is expected to inch up 1.4 per cent as compared to last year’s 0.7 per cent as fiscal measures to support private spending and boost growth are included in this year’s budget. Estimated to be around 0.5 per cent is the S$NEER slope which is presumed to be maintained by MAS. However, measures to balance the planned goods and services tax (GST) hike from 7 to 9 per cent and support ailing industries may be included in the fiscal expansion. The rate of appreciation of the S$NEER from October 14th was decreased by the regulatory board, after considering its fluctuations and the country’s moderate economic growth. After averting a technical recession, the previous quarter, the Lion City expanded at a modest pace by 0.8 per cent year over year (YoY) in the fourth quarter of 2019. The service sector had a growth of 1.4% YoY while the manufacturing sector shrunk by 2.1 per cent YoY.
More Expansionary Fiscal Budget for 2020 Will Able to Help Singapore Economy
In November there were expectations for a GDP growth of 0.5 to 1 per cent. This reflects tentative optimism after the two earlier downgrades which had expectations of zero growth. Nonetheless there are indicators that a worse performance is yet to come. The latest figures predict a worse performance than 2018’s GDP growth of 3.1 per cent. This is the slowest growth since the global financial crisis in 2009. Expectations of GDP growth in 2020 is looking very subpar. After the MAS’ monetary policy easing in October 2019, a more expansionary fiscal budget for 2020 will highly likely be able to help with any heavy-lifting required in the interim.