As China is Singapore’s largest export market, economists in Singapore are more concerned about China’s economy slowing down than the trade dispute between China and the United States. Singapore’s economy exceeded expectations to grow 3.3 per cent in 2018, which was close to the 3.6 per cent growth in 2017. It is expected to grow between 1.5 and 3.5 per cent in 2019.
Given China’s economic slowdown and a possible escalation of trade tensions, Singapore’s GDP growth is likely to moderate next year. In a December survey by the Monetary Authority of Singapore (MAS), private sector economists said they expect GDP in 2019 to come in at a lower 2.6%.
With the concerns regarding China, more companies are realising the importance of ASEAN. Some are planning to relocate their production facilities from China to Southeast Asia in a bid to avoid US tariffs, while others have started exploring the possibility of moving their supply chain from China to countries such as Vietnam and Indonesia.
The importance of the region comes after years of efforts by the Singapore government to foster greater economic cooperation between ASEAN economies. However, whatever positive impact from trade diversion, though, would not be immediately obvious to Singapore but would instead take around 12 months for the benefits to be felt.
Economists feel that Singapore needs to pivot more to ASEAN. Even though the benefits may not be seen so fast, Singapore, as a regional hub, can benefit from investors diversifying into ASEAN.