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MTI sees 'modest' impact on S'pore in mid to long term
SINGAPORE expects the direct impact of the United Kingdom leaving the European Union (EU) on its trade-reliant economy to be "modest" in the medium- to long-term.
This assessment, made by the Ministry of Trade and Industry (MTI) in response to queries from The Business Times, adds to similar readings made recently by Singaporean government agencies and officials.
Polling for a referendum on whether Britain should stay in or leave the EU were slated to close at 10pm on Thursday in the UK (5am on Friday in Singapore).
A "Leave" outcome has been widely referred to as "Brexit".
First indications of the outcome of the vote may come at about 5am on Friday in the UK, said the British media; this would be at around noon on Friday in Singapore.
An MTI spokesman said on Thursday: "Based on analysts' current ballpark estimates of the impact of Brexit on the UK and the Eurozone economies, the MTI's assessment is that the medium- to long-term direct impact of Brexit on the Singapore economy is likely to be modest.
"Given the unprecedented nature of Brexit, its full impact on the UK, the EU or the global economy will be heavily dependent on the UK's subsequent trade arrangements with the EU and other markets."
This follows the statement by the Monetary Authority of Singapore (MAS) that it is monitoring the developments closely. "Singapore's banking system remains sound and resilient, with strong capital and liquidity buffers to withstand shocks," its spokesman said.
In a recent interview with Reuters, Singapore's Trade Minister Lim Hng Kiang had said that he and fellow officials had been tracking the developments.
Brexit is "definitely not a positive development when you talk about global economic recovery", he said.
While economists BT spoke to agreed that a Brexit would not have a severe impact on Singapore in the medium to long term, they added that such an event is unprecedented, and will have an effect on global and business confidence.
Jeff Ng, economist at Standard Chartered, said Brexit will have limited direct impact on Singapore, but that its indirect impact on global confidence and on the major economies could be greater.
As a result, Singapore will be more susceptible than other Asia economies, due its trade openness. "Market variables such as the Singapore dollar may be more impacted from a sharp fall in pound strength," he said.
Said CIMB Private Banking economist Song Seng Wun: "Uncertainty may cause a change in consumer behaviour; businesses may thus stand on the spot, waiting for clearer outcomes. Global trade will then be affected."