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Singapore Economic Forecast in 2016

February 04, 2016 | Sharon Cheong

From the 0.1 percent projected economic increase in 2016 reported because of its slumbering manufacturing sector, Singapore's economy has rebounded in Q3 with a 1.9 percent expansion on its Seasonally Adjusted Annualized Rate or SAAR and 2.0 percent GDP growth according to Q4 data. The projected revision came about because of the country's significant service expansion and decrease in the drag from manufacturing. China's slowdown has loads of spillover effects all over the ASEAN region. 

The 2016 Forecasts for Singapore's Economy 

Singapore's economy has survived this Asian economic downturn domino effect thanks to its strong finance sector, but this advantage has been curtailed by weak labor and manufacturing sectors. Growth is tepid but ever-present as far as Singapore's 2016 economy forecasts are concerned. To wit: 

  • Singapore's Present Economic Reality: According to Q4 data, the tepid growth of Singapore comes from its non-oil exports swinging to contraction. There's also the fact that back in October 2015, the Singaporean manufacturing sector went down. In the fourth quarter 2015, the Singaporean economy advanced by two percent, which is slightly faster than the previous quarter's 1.8 percent expansion. 
  • Slowing Labor Force Could Affect 2016 Outlook: In the last four years of 2011 to 2014, labor force productivity in Singapore has been disappointing. What's more, the country's labor force continues to slow down to global financial crisis levels or close to them (the unemployment rate remains at 2.0 percent, with Q4 2015 getting 2.1 percent.) As such, it's unlikely that labor will improve in 2016. 
  • Main Economic Forecasts for 2016: Preliminary estimates show a Singapore that's slow but steady when it comes to recovery. However, its consistency will win the day in the end. In particular, thanks to its expansion of its construction and services sectors, 2016 promises to be a year where Singapore will continue to find ways to make up for its shrinking manufacturing industry. 
  • GDP Forecast by the Bank of America: The Bank of America cut its 2016 GDP growth forecast for Singapore by 2.2 percent from its earlier prediction of 2.8 percent. Although the nation improved from the 1.8 percent forecast to 2.0 percent in Q4, it's still below the earlier 2.8 percent predictions. The new normal GDP growth for the country appears to be converging to the 2.0 percent average. 
  • Inch-by-Inch Recovery: Singapore's tactic towards a healthier economy seems to focus on inching towards success by gradual modest goals to stem the downward economic tide of the ASEAN region thanks to lower domestic demand. For example, it was able to beat market expectations of a mere 1.3 percent growth by getting a 2.0 percent growth rate in the fourth quarter of 2015 and a potential 2.2 growth rate in 2016. 

Singapore's Financial Outlook in a Nutshell 

Singapore's recovery and growth is going slightly faster than expected, although it's still tempered by the slowness of its growth, its weakened labor force, and the struggling manufacturing industry. Its Ministry of Trade and Industry will likely focus its efforts in maintaining this slight GDP edge in order to stop the continuing negative effects of a challenging global economy. 

The silver lining here is that it beat Q4 forecasts, which should translate to a better performance in 2016. Startups should the core of the government budget in 2016. Incidentally, Servcorp's services - affordable serviced offices that are fully furnished and online-based virtual offices - are quite conducive to keeping small to medium enterprises afloat because of their ability to cut your overhead expenses in half. Please call +65 6690 6161 for more information.