Resilience Of SEA Markets

There have been reports that signal uncertainty and slower growth in the global economy. The international Monetary Fund (IMF) has projected that the world’s economy will grow by around 3.3 per cent in 2019 and 3.6 in 2020. That is slower than the 20-year average of 3.8 per cent per annum. 

In the Asia-Pacific region, exports fell year-on-year in the first half of 2019, after growing by 10 per cent in 2018. This is the first time that exports have fallen year-on-year. Growth in Southeast Asia is also expected to grow at a slower rate of 4.8 per cent, down from 5.3 per cent last year.

With the on-going trade war with the United States, even China is expected to see its growth rate slow down to around 5 per cent annually over the next few years. This is slower than the 7 per cent achieved in the last five years.

Expecting challenging economic times ahead, Singapore’s Ministry of Trade and Industry (MTI) has recently reduced its forecast of 2019’s gross domestic product to between zero and 1 per cent. 

Analysts, however, feel that as a whole, the Southeast Asian economy will display resilience and remain strong, especially those are boosted by domestic consumption. They point to the fact that foreign direct investments (FDI) are still growing strongly, especially in the manufacturing sector.

The United States Federal Reserve had recently cut rates for the first time since 2008. There is more room for the central banks in Southeast Asia to ease on interest rates to support growth, since more cuts are anticipated in the near future.

Analysts also expect commercial space to be healthy as companies from such sectors as technology and financial services, as well as those providing outsourced professional services continue to expand. Office rents in the region could rise by as much as 7 per cent on average over the next couple of years, contributed by Singapore, Philippines and Thailand. Retail rents are also likely to grow at a rate of 3 per cent per annum.

Singapore is APAC’s most competitive data centre market

Another market that is growing in the region is the data centre market. According to a recent report, Singapore has maintained its ranking as the most competitive data centre market in Asia Pacific (APAC) for the third straight year.

Globally, Singapore ranks third, just behind Iceland and Norway and ahead of major countries and regions such as United States (7th), Hong Kong (9th) and United Kingdom (10th).

Singapore scored well due to its high-speed connectivity, robust infrastructure, prime geographical location and low risk of natural disasters. Political stability was also mentioned as a positive contributing factor.

Some of the notable tech companies which have set up data centres in Singapore include Facebook with its $1.39b data centre, its first in Asia. Google has also successfully tendered for a land plot from Jurong Town Corporation to build its data centre.

The index identifies the top competitive factors such as connectivity, ease of doing business, political stability, corporate tax rate, natural disasters, energy and security that are likely to affect the successful operation of a data centre. Countries and cities are assigned scores based on the weightage allocated to each of the factors.