Singapore: Dismal growth and unsuccessful restructuring suggest policy shift 2015
- Virtually every economic indicator has been weak in recent months. Consumer spending is desultory while investment has been contracting since 2013. Exports and industrial production are languishing despite global demand growth, suggesting a possible loss of competitiveness. The restructuring of the economy has yet to produce any of the gain in productivity that the economy needs.
- Indeed, without rising productivity, unit labour costs have increased 4.4% year-on-year, as the tighter restrictions on foreign labour inflows caused wages to rise.
- Singapore’s economic performance is expected to be muted in 2015, assuming a gradual global recovery and continued headwinds from domestic restructuring.
- We think that policy change is on the cards. First, monetary policy is likely to be eased by April next year, with the trading band of the SGD trade-weighted exchange rate being re-based lower and shifting to a flatter gradient of appreciation. Second, a more fundamental rethink of the economic restructuring is needed, given the lack of success so far. Some of the restrictive measures affecting property and lending may be partially reversed.
Tagged in:
A Growing US Economy
A more aggressive Eurozone policy
Ease on monetary policy
Exports and industrial production
Fall in manufacturing exports
Fall in Singapore GDP output
Gains in productivity
Global demand growth
Growth of median household income
Improve tourist spending
Increase in fiscal spending
Key drivers affecting Asia
Loosening on monetary policy in China
Low unemployment rate
Plunge in oil prices
Private consumption expenditure
Productivity growth GDP Growth
Restructuring towards higher productivity
Singapore economic restructuring