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

+++31 January: Singapore gains some respite by US-China trade accord, but trading conditions still frail+++

It is a cautious recovery the Lion City has been staging over the past two months: With the exception of business investment, almost every indicator has been regaining some strength between last November and this month. Net exports in particular have managed to turn positive again. Indeed, that’s a picture mirrored by most countries in Southeast Asia, with South Korea bringing up the most notable example. Consequently, both sub-indicators of the SiNGES have recovered towards or even up and above the neutral threshold. Yet the moment exporters and manufacturers in the region were sighing with relief, the next shock arrived, namely the coronavirus and its increasing potential to hit an already slowing Chinese economy even more. And it’s not only that exogenous health crisis threatening to nip a frail recovery in the bud: Markets have been too hasty to celebrate the US-China trade accord when, in fact, it is a mere ceasefire leaving most tariffs in place as well as still underpinning a thorough decoupling between the American and Chinese economies, the effects of which will be felt in years to come. Singapore’s economy, with its pronounced dependency on frictionless trade, still stands to suffer from that development which, in due course, might well result in two opposing trade spheres where companies trading with one block suffer from barriers to the other. By now, general wariness has been having an impact on retail sales, too, a crucial driver of Singapore’s economy which has begun to stutter. As long as this fundamental uncertainty prevails, the Lion City will not be out of the woods.

YouTube podcast