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

+++29 September: The v-shaped recovery is here but remains vulnerable to resurgent coronavirus+++

The v-shaped recovery of Singapore’s economy our SiNGES had been precluding over the summer has materialised: After its steep drop in Q2 economic activity has rebounded just as resoundingly, as both components of our SiNGES and thus the main indicator are back in positive territory again. Industrial production, net exports and retail sales are all indicating a decent recovery, albeit with a lagging services sector as depicted by the related PMI data. And the major contributing factor is just what we have been highlighting early on: the Chinese economy re-emerging earlier and better than most from the Covid shock. But as always with this unusual pandemic-driven jolt to the global economy, there’s a major caveat: The strong recovery is wholly dependent on the development of coronavirus in the near future, and, alas, the numbers are heading into the wrong direction. That is showing in the details of our SiNGES, too: The expectations component is lingering beneath both the state component and the main indicator, a combination usually indicating a limited economic expansion. That’s because expectations tend to lead the state component and thus the main indicator, see chart. Moreover, the economic slump in the Lion City had actually started before the onset of the pandemic: The Sino-American trade spat boiling over now and then has been being a constant weight around the neck of Singapore’s trade-dependent economy. Far from being resolved, it appears to stay no matter who’s going to reside in the White House the next four years. Small wonder, then, that the Lion City’s businesses are wary of any economic recovery as long as the toxic brew of coronavirus and protectionism exudes its acrid fumes.