-Hover over the picture and click on the magnifier to zoom-
Sources: Monetary Authority of Singapore, Trading Economics, Bloomberg
+++29 November: A recovery of sorts, but sentiment remains subdued+++
After falling back from its exuberant high just as precipitously, the expectations component of our SiNGES has managed to stabilise just at the main indicator line, thus completing an important test of momentum: Had it collapsed down and below the main indicator, that would have been nothing short of alarming. The way it has played out over the past four weeks, the Singaporean economy has staged an impressive bout of strength over the late summer, with annualised GDP growth in the third quarter still printing a remarkable 3 per cent even after revision of the original estimate. After a largely disappointing performance over the past months, even net trade made a contribution. Yet the marked downturn of overall investment, in excess of the metric’s usual pattern, and deteriorating business confidence surveys underline the outlook we’ve been drawing in this space all over the year: If last efforts to avert an all-out escalation of the trade spat between China and the United States fail, Singapore will be in for some collateral damage only the size of which remains to be determined. That said, taking the drive of the past quarter over to the beginning of the new year, the city state’s economy stands to close this year with decent growth still more dependable than many of its ASEAN neighbours. And should the trade war be averted or whittled down to irrelevance eventually, the Lion City still has the sinews to start into 2019 with a roar.
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.