Singapore's GDP grew by only a quarter year-on-year in 2019, only a quarter stronger than in 2018, and less than a fifth in 2017, according to official figures.
“Not strong enough" is a euphemism. Indeed, Singapore's economy nearly plunged into a technological recession in 2019. What is the cause of the recession looming over singapore as a model economy?
Singapore's port throughput, transit volume is flat with 2018; the construction industry has shrunk by% in 2018, but it has grown by% in 2019; and the service industry has grown by%, although not as fast as 2018.
Singapore's global investment behemoth, Temasek, has increased its net portfolio value by S $5 billion, if not S $183 billion, despite selling more or less in 2019, investing S $24 billion and selling off S $28 billion, and its financial asset management has remained around US $trillion, nearly 10 times Singapore's GDP, compared with S $183 billion a decade ago.
The main cause of Singapore's economic downturn is manufacturing. Manufacturing accounts for about 20% of Singapore's GDP, with electronics and precision engineering accounting for about 40% of manufacturing. Manufacturing in Singapore shrank by% year-on-year in 2019, while it expanded by 7% in 2018.
The main cause of Singapore's weak electronics industry is falling global demand. Hundreds of semiconductor companies in Singapore are in varying degrees as global chip demand is projected to fall by around% in 2019. Most of these companies are joint ventures between singapore and the u.s. and japan. Although joint ventures have led to a rapid increase in the global share of singapore's semiconductor industry, they can easily become passive if external conditions change.
At the beginning of last year, Singapore's official forecast for growth in 2019 was also only%-%, lower than in 2018. In the first quarter of last year, Singapore ' s GDP grew by just% year-on-year, continuing the quarterly decline of 2018; in the second quarter, GDP grew negatively. But at the time Singapore maintained a monetary tightening policy that had been in place for more than two years.
It wasn't until October that it cut interest rates, giving third-quarter GDP positive growth and avoiding two consecutive quarters of negative growth and plunging into a technical recession. The adjustment of monetary policy is obviously a little late.
Second, although the electronics industry in Singapore has been developing for more than 10 years, it has not been technically up to the top. Most singapore's electronics companies are co-operatives, with joint ventures focusing on market occupation rather than cutting-edge technology development, which is why they are struggling to cope with the growing international trade friction. Joint ventures, for example, have to worry about being blacklisted by the Commerce Department.
Arguably, the performance of singapore's electronics industry in 2019 provides a negative case for an economy that is interested in developing and mastering core semiconductor technologies. You can't rely on the market for everything.
On the one hand, Singapore will hold general elections in the first half of 2020. The PAP has the incentive to implement more active fiscal and monetary policies. The forthcoming budget will support businesses to improve productivity and build new capabilities, the government will also conduct skills training and build social safety nets, mr li said in a new year's speech.
On the other hand, singapore has a solid background and, although its industry is not strong enough, it has accumulated enough experience in financial asset management and export market layout over the years.
Temasek has 26 per cent of its investment in the Chinese market, the same as Singapore itself; China remains the largest export market in Singapore. This is similar to the South Korean semiconductor industry. South Korea's semiconductor industry suffered a heavy blow in 2019, with exports down%, but still maintained around 5% growth in China.
Based on Singapore's economic characteristics, in recent years Singapore has placed special emphasis on upholding multilateralism and free trade, and has also actively participated in the construction of multilateral frameworks such as RCEP. After all, to deal with the industrial crisis, in addition to improving their industrial competitiveness, unilateralism to say no, but also have to do.