Large stimulus likely in Singapore Budget: HSBC

Singapore

ECONOMIC growth in Singapore is likely to remain subdued in 2020 and this could be the impetus for a fiscal stimulus package that may be the largest in a decade, according to HSBC Private Bank.

The bank is expecting the Singapore government to embark on a "highly expansionary" budget. The deficit may widen to 1.3 per cent of gross domestic product (GDP) on the back of packages aimed at restoring business and consumer confidence.

This implies that fiscal impulse, which measures how government spending affects the economy in the short term, could be "as large as 1.9 per cent of GDP, probably the largest seen in a decade".

On monetary policy, it is expecting the Monetary Authority of Singapore to adopt a flat Singapore dollar nominal effective exchange rate (S$NEER) slope in the second half of 2020. Along with an improving manufacturing sector, they have contributed to the revision of HSBC Private Bank's Singapore growth forecast from 0.4 per cent to 0.8 per cent in 2019. It also raised this year's growth estimate from 0.9 per cent to 1.5 per cent.

HSBC Private Bank is "neutral" on the Singapore equity market for 2020. James Cheo, HSBC Private Bank's chief market strategist for South-east Asia, advised investors to look for listings that are well-positioned to capture growing consumer spending power in South-east Asia.