The Institute of Chartered Accountants in England and Wales (ICAEW) released a report on Monday that Singapore's gross domestic product (GDP) growth this year is expected to fall 2.4 percent amid a more challenging environment for exports and the manufacturing sector.
ICAEW said that the decline is in line with easing growth across South-east Asia due to slow growth in export caused by the slow import demand in China. The report sees South-east Asia's growth is at 4.8 percent in 2019 and 4.7 percent in 2020. The growth is down from 5.1 percent last year.
The report forecasted that Singapore's growth in 2019 is comparable to the growth projection of the Ministry of Trade and Industry which is slightly below the mid-point of the official 1.5 to 3.5 percent range. It is also in line with the forecast of the March survey of the professional forecasters submitted to the Monetary Authority of Singapore at 2.5 percent. In 2018, the country's economy grew to 3.2 percent.
The report said that the South-east Asian nations' economy, excluding Malaysia with positive annual growth, started on a soft note with a broad-based deterioration in export momentum. The report added that the data is likely to be volatile in Q1 given the timing of Chinese New Year while Singapore export growth improved in January.
Sian Fenner, ICAEW economic adviser, and Oxford Economics' lead Asia economist said that looking ahead, we expect the risks to the region's economic outlook to be primarily to the downside. She also said that a sharper slowdown in Chinese economic growth triggered by worsening confidence or a renewed escalation in US-China trade tensions would all affect global trade and growth across the region.
The report also said that the exposure of Singapore to China implies additional risks to growth that directly affects domestic demand through supply demands. The report also projected that domestic demand will moderate because of sluggish residential investment and the rising headwinds facing business investment. The global trade tensions are also expected to dampen private sentiment and intentions to invest. The report also forecasted that corporate profits will soften.
Mark Billington, Regional Director of ICAEW for Southeast Asia, said that while the mildly expansionary Budget will support growth, ICAEW maintains their cautious outlook for Singapore's economy, given the slowdown in global trade and the likely impact on Singapore's manufacturing and externally-dependent service sectors.
ICAEW also said that on a more positive note, government measures to support businesses and encourage investment, particularly in adapting to Industry 4.0, should continue to back and provide a boost to planned infrastructure investment.
