Singapore's trade outlook dims as US politics move to the right

SINGAPORE (Nov 18): The contraction in external trade in 4Q16 will be another drag on Singapore’s GDP growth as the economy have already slowed to 0.6% growth in 3Q16 -- according to advance estimates -- from 2.0% in 2Q16, says Maybank Kim Eng lead analyst Suhaimi Ilias in a Thursday report.

Suhaimi notes that global trade is also stepping into the unknown after the surprise US election results. Trade-reliant East Asian economies, which have already been reeling from weaker trade over the past two years, saw the future of the Trans-Pacific Partnership Agreement (TPP) cast into uncertainty just when Singapore’s headline manufacturing PMI in Oct hovered around the borderline 50 mark, thanks to improved readings for “electronic new exports orders” which hit a 27-month high of 51.7 last month.

“We maintain our growth forecast for 2016 at 1.8% for now until the released of final 3Q16 real GDP growth on Nov 24,” says Suhaimi. Meanwhile, the Monetary Authority of Singapore (MAS) kept its policy unchanged on the Oct 14 meeting, maintaining the rate of appreciation of the SGD NEER at zero percent as well as the width of the policy band and the level which it is centred.

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