Singapore’s economy will grow on its expansion path for 2018, despite downside risks in the global economy brought by trade tensions between United States and China, said the Monetary Authority of Singapore (MAS) in its biannual Macroeconomic Review which was released today.
“For 2018, Singapore’s economic outlook remains positive. The trade-related sectors will anchor growth as they continue to leverage on sustained demand in the global electronics industry, especially from regional production nodes,” said MAS.
“Meanwhile, digital transformation is set to play an increasingly important role in modern services. As firms undertake investment to digitalise, they impart positive spillovers to industries providing supporting services, which will boost both productivity and economic growth,” it added.
Shedding light on the consumer spending, MAS said, “In the domestic-oriented cluster, consumer spending is expected to pick up alongside the improving labour market. Moreover, there has been a discernible increase in the share of consumer spending on non-tradable services where the value added multiplier is higher, which augurs well for the cluster’s outlook, especially over the longer term. “
Though the global tech expansion is projected to remain firm, it is expected to continue at a more restrained pace as the global economic cycle matures.
While speaking about the global trade tensions between US and China, MAS said, “The recent escalation of rhetoric from both the US and China has stoked fears of a protracted period of trade tensions between the world’s two largest economies.
“While the direct impact from tariff actions announced thus far should be limited, the curtailment of business investment and consumer spending arising from a loss of confidence could quickly dampen global economic growth and pose some downside risk to Singapore’s economic growth outlook,”” it added.
However, MAS sounded optimistic about Singapore’s growth saying, “Barring a significant escalation of trade and other geopolitical tensions, domestic GDP growth is expected to continue on a steady expansion path for the rest of the year.”
MAS expects Singapore's GDP in 2018 to come in at slightly above the middle of the forecast range of 1.5 per cent to 3.5 per cent, unchanged from its monetary policy announcement two weeks ago.