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Sources: Monetary Authority of Singapore, Trading Economics, Bloomberg
+++24 January: Brightened expectations prove short-lived as current trading conditions continue to worsen+++
Even before the eventual resolution of the Sino-American trade stand-off – in one way or the other –, Singapore’s economy has suffered collateral damage already. GDP growth has been failing to rise from the somewhat lacklustre levels attained in the fourth quarter of 2017, driven mainly by drastically decelerating manufacturing which in turn has been suffering from weakening export demand. Front-loading orders by trading partners of Singapore as a precaution against a potentially escalating trade war appear to have been tapering off in the last quarter; hence, net trade as a particularly important driver of the Lion City’s economy has succumbed to negative values again. Singaporean shoppers, alas, are not coming to the rescue, with retail sales in a rather subdued mood all over the past year. As the result, the recent rise of the expectations component has once again failed to lift up current trading conditions, too, just as in 2017. Our SiNGES’s state component has now been falling over the past two years almost uninterruptedly, and is about to touch the zero line for the first time since November 2016; values below zero would be indicating a recessionary environment. In any event, the conspicuous upwards trend in economic sentiment between the late summer of 2015 and the spring of last year has been broken unambiguously, pointing towards a very difficult year for the Singaporean economy should China and the United States fail to come to terms – all the more with regard to the current world economic outlook by the International Monetary Fund, projecting a slowing world economy and, hence, falling export demand for Singaporean manufacturing goods in general.
Our SiNGES is an indicator of the condition of Singapore’s economy which, otherwise, does not exist in this comprehensive form. It has been constructed along the lines of our UKES (see home page) and consists of two components and 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 describes the development of the Singaporean economy in the recent past rather precisely; particularly the expectations component has emerged as a valid tool for prognosis. It 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:
When 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. When 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.
Finally, on a design related note: We opted for green to match the dominant colour in the Garden City’s landscape.