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

+++23. July: Misgivings validated as state component falls deeper into negative territory among simultaneous hits to exports, retail sales and industrial production+++

A mere, quick glance at the stats board of our SiNGES tells almost the whole story: A sea of red indicates rapidly deteriorating economic conditions in Singapore, with PMIs printing only just above the neutral threshold. Consequently, the state component of the SiNGES has plumbed new lows at negative values, its worst reading in seven years. It’s easy to see why: Industrial production, retail sales and net exports, all are down on a monthly basis and growing by a paltry margin year on year. Though the expectations component has managed to recover from a likewise drop into negative territory in May – its first in four years – this was primarily driven by a still frothy stock market and ought to turn out as a dead cat’s bounce. Hence, we are prepared to slash our guidance for full-year GDP growth even further: By now, we anticipate Singapore’s economy to grow by no more than 1.5 per cent for the whole of 2019, and most probably even less than one per cent should the current development of the SiNGES continue at its next update due in September. Even an agreement in the US-China trade spat some time during the autumn would now come too late to spare the Singaporean economy a marked slump; should, by the same token, a deal fail to materialise this year as we project, the Lion City may be confronted by its first recession in many years.

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