Singapore's economy at a glance

Singapore is the Commonwealth’s business hub in Southeast Asia. And since the Commonwealth constitutes the focus of our analytical coverage, we are observing the Lion City’s economic state with our own, specially developed indicator, the SiNGES. It has been constructed along the lines of our UKES, its sister indicator for the United Kingdom and consists of two components constituting the main index.

The component “expectations” runs ahead of the current situation, comprising elements such as development of inflation and interest rates, consumer- and business confidence, etc. The “state” component describes the current situation and comprises data such as industrial production, net trade, etc. The main index, then, is a smoothed combination of the two components.

The SiNGES is calculated to scale so that a positive reading of the state component as well as the main index signals current economic expansion. Furthermore, the SiNGES generates these other signals: If the expectations graph rises through that of the state component, that is a valid signal for an economic upturn in the near future (3-6 months) and vice versa for a break-down through the state graph. If the state component, additionally, plots over the main index, that signals a healthy and stable economic expansion; when it plots beneath the main index, the current economic upturn has not yet solidified or the recession is persistent, respectively.
Sources: Monetary Authority of Singapore, Trading Economics, Bloomberg

+++26 September: Economic sentiment finally sours, too, sending main indicator to worst level in seven years+++

And thus it has finally happened: The long anticipated drop of the expectations component of our SiNGES into negative territory, after the state component had done so some three months before. With no quick solution to the Sino-American trade spat in sight, and Japan and South Korea becoming ever more embroiled in their own trade war into the addition, economic sentiment in the Lion City has finally succumbed to a pronounced blues. While expectations have dropped to their lowest level in four years, the even worse levels of current trading conditions entail that the main indicator has reached its worst reading in seven years – indicating a looming recession. True, business investment and industrial production have provided some respite for the city state’s economy of late, but that doesn’t alter the general picture. Hence, even if Singapore is to escape a technical recession this year for sheer lack of time, we expect its economy to contract during the first half of the new year, save for a comprehensive deal struck between Washington and Beijing. Furthermore, we regard even the recently lowered projections for Singapore’s economic growth by both official and private institutions as too optimistic: A mere one per cent GDP growth for the whole of 2019 will prove to be a tall order for the Lion City. All now depends on whether this new era of protectionism will entrench or turn out to be but a fleeting episode.

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