On December 13, 2019, a report from Nomura Holdings revealed that the coming year may be a better one for Singapore economically. The country is expecting to see a faster growth in its annual GDP rate in 2020 than it had this year.
The speculation is that the growth rate for the country’s economy is likely to rise by 1.3 per cent overall. The growth in GDP has only been an average of 0.5 per cent this year.
Though not a huge margin, the rise is looked forward to with much anticipation. A worldwide innovation upswing, including growing international interest for semiconductors, is expected to keep the country’s electronics sector flourishing in the global market. This will also give the Government an opportunity to even out some of the country’s pertinent market risks.
In recent years, the country has built up a fiscal surplus. 2020 will likely give the Government a chance to utilize this to face a trade war re-escalation. The coming year will likely prove to be beneficial in bringing a slow down to the Chinese economy and this will further aid Singapore’s own market rates.
The recent information provides clear evidence of the tech rally. The manufacturing of Electronics, in particular, shows an upward curve since October after a seven-month-long decline. Even though the graph still moves downward with regard to the yield of semiconductors, nevertheless the output has been much better than the previous months wherein the market had witnessed a double-digit fall.
The Singapore Institute of Purchasing and Materials Management has recently compiled this year’s Purchasing Managers’ Index. This report corroborates most of the data, and points towards a likewise improvement in the health of the country’s overall electronics sector.
Despite predicting a rise, Nomura’s estimated growth gauge for the coming year is still lower than Singapore’s potential GDP growth rate. The later is estimated to be at around 2 per cent. The Ministry of Trade and Industry has also predicted a 0.5 per cent to 2.5 per cent growth forecast range for the coming year.
There is, however, an anticipation that the economic recuperation of Singapore will be facing lukewarm pressure from external demands as the country continues to remain cautious with regard to the global economy, in general, and China’s economy, in particular.
The current year’s export rates have been low and the country is set to close the year in the negative at – 3.9 per cent. Though predicted to be a relatively better year for exports, 2020 is likely to see the numbers rise to only 1.7 per cent.
The predicted export rates continue to reflect the decline in the labour market. This, however, will perhaps find some respite towards the end of 2020 as the scheduled general elections are most likely to see the implementation of some expansionary policies in the country’s fiscal scene.
The outcome of the current trade negotiations between China and the United States may also expedite the current recovery rate of Singapore’s GDP in 2020.
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