Despite the softening global economy, Singapore’s economy is expected to see a modest pace of growth of 2% to 2.5% in 2015, with risks tilted to the downside, according to the Monetary Authority of Singapore (MAS).
In its half-yearly macroeconomic review released on October 27, MAS said a similar growth outcome is anticipated for 2016.
Looking further ahead, as Singapore progresses into the next phase of economic restructuring, the central bank said growth will have to be driven by productivity gains that are underpinned by knowledge and skill upgrades, according to a report by Bernama.
MAS said technology and innovation-intensive activities will play an increasingly important role in propelling Singapore to the new economic frontier.
With Asia’s push into the manufacture of advanced products set to continue, Singapore is expected to feature in the high-tech goods and services space.
Investment in the digital economy, as well as a complementary labor force with the requisite skills set, will be critical.
MAS noted that the outlook for the global economy has softened since the April 2015 review. It added that the deterioration in the external environment has led to the sluggish performance of the Singapore economy and will make the quarters ahead challenging.
While the recovery in the US economy has gained some traction, the strength of the recovery may not filter down as strongly to import demand this time around, it said, adding that the region will have to contend with challenges arising from China’s slowdown and tighter external financing conditions.
Given Singapore’s close linkages with the region, it said the external-oriented sectors are likely to remain sluggish.
Apart from cyclical downtrends, the domestic IT industries will have to confront the effects of ongoing reconfigurations in regional supply chains.
Nonetheless, Singapore’s strengthening linkages with emerging economies in regional supply chains could provide some support at the margins.
Going forward, oil trading oil should remain buoyant, and arbitrage opportunities in the market could persist in the months ahead, keeping demand for cheaper crude oil strong.
Further, MAS said, the domestic-oriented industries will benefit from firm demand for essential services such as healthcare and education.
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