Last updated August 8th, 2018.

 

Singapore’s growth is far weaker than economists hoped for with analysts blaming the nation’s sluggish manufacturing sector, along with an intensifying US-China trade war.

Companies are nonetheless trying to counteract this rather unexpected decline. Above 70% of Singaporean manufacturing firms plan on investing in new machinery and other technologies.

In an ideal scenario, this would let businesses stabilize the manufacturing industry by boosting their production capacity and exports.

Yet considering such a drastic and continuous decline in these clusters, Singapore’s economy demands further measures to help revitalize trade and manufacturing activity. Old, outdated policies and laws must also be reviewed to maintain Singaporean competitiveness.

 

Will Investment Help GDP Growth in Singapore?

Singapore’s economy has certainly seen better times – it’s not all bad news though. Significant deals were struck lately.

For example, a SG$335 million deal with Japanese pharmaceutical firm Chugai was announced. A deal worth SG$920 for ST Aerospace is another case where the economy might rekindle its decline.

Most service-based industries are growing at a healthy pace well within (or even above) the proposed ideal rate of between 2% to 4%. In fact, finance and insurance sectors are growing by over double that amount.

But the overall balance of industries means that GDP growth in the city-state has been tepid for several years. This will prove a challenge for Singapore’s government in 2019 and beyond.

We’re already noticing significant movements in the right direction though. The Singaporean economy should return to its former self, perhaps helped by effort from the finance and retail sectors.

 

Shift in Singapore’s Main Industries?

New York blogger Dominic Basulto, among countless other experts, acknowledges Singapore’s innovative abilities. He commends the country on how well they can adapt to changing global economic conditions, specifically regarding tech and innovative sectors.

Singapore’s track record of innovation is staggering given their economic history in the past 50 years. The city-state transitioned through many stages of economic development in just barely a few decades’ time. But does this mean they will respond effectively to the current slowdown?

The answer is most likely yes, though Basulto also notes a slower Chinese economy could also affect their outlook. Singapore has proven on many occasions its ability to respond to dynamic economic conditions – especially in recent years.

With trade tensions between the US and China at their peak, Singapore’s Ministry of Trade and Industry said the city-state’s economy is “unlikely to weaken further”. Certain sectors are failing yet others could still blossom in the near future.

In the meantime, it may be a better choice to stay away from stocks in Singapore and invest in emerging markets nearby instead.

Diversification is important no matter where you live. Remember: just like investing in a single stock is risky, investing in a single country is also dangerous.

 

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