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Trade war, major export markets to determine Singapore's economic outlook: Chan Chun Sing

THE outlook for the Singapore economy will be determined by developments in the US-China trade conflict, as well as how the city-state’s major export markets perform, said Trade and Industry Minister Chan Chun Sing in Parliament on Monday.

Further tariffs will impact more goods and affect global supply chains, with prolonged tensions likely to lower global business and consumer confidence, he pointed out.

China’s economy could slow down more sharply due to the trade conflict which would dampen import demand from the region, even as South-east Asia remains a “bright spark” and the US economy still holds steady, he added.

Mr Chan was responding to queries by Members of Parliament on the impact of the ongoing trade conflict on Singapore and the government’s strategies to overcome the economic challenges that lie ahead.

Already, lower demand in Singapore’s key export markets has affected Singapore’s outward-oriented sectors such as electronics, precision engineering and wholesale trade, whose performance remains weak, he noted.

The Ministry of Trade and Industry cut its 2019 full-year growth forecast range to 1.5 to 2.5 per cent in May after just one quarter, from an earlier 1.5-3.5 per cent.

Mr Chan laid down three key uncertainties that Singapore faces: the US-China trade dispute, which has gone beyond retaliatory tariffs to other areas such as restrictions on technology access and sales; the uncertainty and the risk of a disorderly Brexit; and the political uncertainties of some regional economies.

He also flagged the need for Singapore to navigate fundamental shifts in the global economy that will shape the city-state’s medium to long term prospects.

One is the future of the multilateral trading system, which is currently under stress, he noted.

The second is the emergence of global rules that may affect Singapore’s status as a global hub, such as the ongoing discussions to introduce minimum corporate tax rates across countries which will affect the city-state’s competitiveness, and carbon caps which will constrain growth potential.

Finally, the ability to harness new technologies and create opportunities, especially in the digital economy, will be key to Singapore’s future.

The minister shared that Singapore will focus its economic strategy on three key prongs: strengthening fundamentals; creating opportunities by constantly refreshing our offerings to business and investors; and promoting a conducive global and regional business environment with likeminded countries and companies.

This would include developing brand new sectors, such as agri-tech and precision medicine.

The latter uses each patient’s biological data to more precisely predict, diagnose or treat diseases, and the Economic Development Board (EDB) is working to bring various biotech firms, medical technology firms, and digital health players to Singapore, said Mr Chan.

To realise Singapore’s plans, the city-state will continue to promote a conducive global business environment, he said.

This will be through advocating for an integrated, global digital economy as well as to deepen and diversify trade links.

Mr Chan concluded: “While there are clouds looming, we believe that we have the fundamentals to weather the storm. Our economic fundamentals are sound, we are in a strong fiscal position, and we are making good progress in restructuring our economy.”

He added that the government “stands ready” to step up its support for companies and workers in sustaining core capabilities, enhancing competitiveness and seizing new opportunities.