Last updated August 8th, 2018.
Singapore’s growth is far weaker than economists hoped for with critics suggesting the nation’s manufacturing industry is to blame.
However, businesses are trying to counteract this decline. Over 70% of manufacturing firms plan to invest in new machinery and other technologies. This should let companies stabilize the manufacturing sector by boosting production capacity and exports.
Given the continual decline in such clusters, greater investment should help revitalize the Singapore economy. “Dated” initiatives must also be reviewed.
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.
A Shift in Singapore’s Main Industries?
New York blogger Dominic Basulto acknowledges Singapore’s innovative abilities. He commends the country on how well they can adapt to changing global economic conditions, specifically within innovative industries.
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 very little 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 now at their peak, the Ministry of Trade and Industry said the Singapore economy is “unlikely to weaken further”. Certain sectors are declining 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 that just like investing in a single stock is risky, investing in a single country is also dangerous.