Singapore’s trade war-induced tumble looks more like a blip

While Singapore

SINGAPORE is a bellwether for the Asia-Pacific region so its GDP decline is worrying. However, foreign direct investment remains strong and early adoption of technology and the realignment of supply chains suggest the current slump will not last.

The continuing economic downtrend facing the Asia-Pacific has in some shape affected almost every country in the region. The confluence of damaging trade policies, stagnant productivity and worsening sentiment have largely prevented the region from resuming its previously explosive growth.

The ongoing trade war between China and the United States has left an indelible mark on the region. Despite immense stimulus efforts, China’s economy posted its worst growth rate in nearly three decades. Growth slowed to 6.2 per cent in the second quarter of 2019, down from the previous reading of 6.4 per cent.

 Chinese pessimism has already had an impact on its neighbours. Malaysia, for instance, has seen both consumer and business sentiment worsen. Echoing these developments is decelerating economic growth, which edged down to 4.5 per cent in the most recent reported quarter from 4.7 per cent in the quarter before that.

Unfortunately for the region, these challenges are nothing new and show no signs of fading near-term. Industrialised Asia (including South Korea, Taiwan, Hong Kong, Malaysia and Singapore) ended 2018 on a sour note and most associated economies have yet to reverse the prevailing trend for numerous reasons. 

The pressures of slowing demand for exports from the region and the ongoing US-China trade war only exacerbate the underlying problems.

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