Singapore economy grew 0.6 percent in the third quarter this year, avoiding technical recession. A technical recession occurs when a country experiences two straight quarters of economic decline.
Still, it might surprise many that with a progressive country like Singapore, it became so close on being hit by a technical recession.
The country did achieve economic growth, but it was still below expectations. Furthermore, the US-China trade war has put Singapore in a riskier position with the possibility of a global recession.
Singapore’s strength, which is its high trade-to-GDP ratios, makes it highly sensitive to global trade flows and business cycles. The country’s goods-producing and service-producing industries have been heavily affected by the ongoing US-China trade war. This scenario reveals how Singapore can be very vulnerable to global events. The global slowdown affects the island city-state in all areas.
The Monetary Authority of Singapore has initiated measures to protect the country from larger economic catastrophes. It has eased monetary policy by decreasing the slope of its dollar policy band. But economists agreed that it would take more than monetary policy easing to fully support Singapore’s economy.
To provide cushions for the country, the central bank decided to adjust its monetary policy. They did it by managing the exchange rate of the Singapore dollar against various currencies of its major trading partners.
MAS has warned that there will still be a slow growth in the global economy – meaning it would put the country in a vulnerable position.
The country’s electronics manufacturing will take the biggest hit. While areas such health, education, and social services will stay resilient.
To find more opportunities for growth, Singapore can look into loosening its immigration policy and diversifying its services sector. With all the global events happening today, Singapore is in a vulnerable position and must face crucial questions that beg for answers.