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Market Research Report

Singapore Country Risk Report Q4 2019

Published by Fitch Solutions, Inc. Product code 177803
Published Content info 57 Pages
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Singapore Country Risk Report Q4 2019
Published: August 21, 2019 Content info: 57 Pages
Description

In light of a weak economic performance in H119, which saw growth contracting in Q219, we have revised our growth forecast for 2019 to 0.9%, from 2.2% previously. The threat of a technical recession is now more pronounced, but we believe that the government and the Monetary Authority of Singapore (MAS) have room to implement policies to support growth in the second part of the year. This could cushion the slowdown in domestic demand, but the external sector will remain a wild card as a US-China trade deal is far from certain, despite the recent apparent thawing of relations between the two countries.

Following a dismal GDP growth print in Q219, we expect the MAS to reduce the slope of the S$NEER band during its October biannual policy meeting. Downside risk to growth still loom large over Singapore, both externally and domestically. Weak external demand is the main reason underpinning our view for MAS to act in October. Our view is also informed by our expectations for inflationary pressure to remain mild, which will not constrain the MAS in easing monetary policy.

We maintain our view that Singapore will register an overall fiscal deficit representing 0.4% of GDP in FY2019/20, narrower than the Ministry of Finance's forecast of -0.7% of GDP. The steady collection of revenue during the first five months of 2019 suggests that Singapore will likely beat its revenue target for FY20 despite the ongoing economic slowdown. Downside risk to our view remains as expenditure could rise more than expected to offset the downside risk to growth.

We expect the Singapore dollar to come under mild downward pressure against the US dollar as market participants increasingly price in a likely easing by MAS in October. Over the long-term horizon, the SGD is likely to stabilise on the back of an improvement of the external sector. We have thus revised our forecasts with the Singapore dollar to average SGD1.3650/USD in 2019 and SGD1.3500/USD in 2020.

Major Forecast Changes:

We have revised our real GDP growth forecast to 0.9% in 2019, down from 2.2% previously, in light of a weak start to the year. We have revised our currency forecasts with the Singapore dollar to average SGD1.3650/USD in 2019 as market participants increasingly price in a likely easing by MAS in October.

Key Risks:

The risk of a technical recession has risen in Singapore after growth contracted in Q219 amid weak external demand (led by a rapidly slowing Chinese economy) and a sluggish domestic economy.

Table of Contents
Product Code: CFSG_20191001

Table of Contents

Executive Summary

  • Core Views
  • Major Forecast Changes
  • Key Risks
  • Country Risk Summary
  • Economic Risk Index
  • Political Risk Index
  • SWOT
  • Economic - SWOT Analysis
  • Political - SWOT Analysis
  • Economic Outlook
  • Economic Growth Outlook
  • Singapore Has Several Options To Contain Threat Of Technical Recession
  • GDP By Expenditure Outlook
    • TABLE: GDP GROWTH FORECASTS
    • TABLE: PRIVATE CONSUMPTION FORECASTS
    • TABLE: GOVERNMENT CONSUMPTION FORECASTS
    • TABLE: FIXED INVESTMENT FORECASTS
    • TABLE: NET EXPORTS FORECASTS
  • Outlook On External Position
    • TABLE: TOP FIVE GOODS EXPORTS
    • TABLE: TOP FIVE GOODS IMPORTS
    • TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
    • TABLE: CURRENT ACCOUNT BALANCE FORECASTS
  • Monetary Policy
  • Rising Prospects Of Monetary Policy Easing In Singapore
  • Monetary Policy Framework
    • TABLE: MONETARY POLICY FORECASTS
  • Fiscal Policy And Public Debt Outlook
  • Singapore On Track To Beat Budget Estimates
    • TABLE: OPERATING REVENUE (SGDMN)
  • Structural Fiscal Position
    • TABLE: MAIN REVENUE AND EXPENDITURE SOURCES
    • TABLE: FISCAL AND PUBLIC DEBT FORECASTS
  • Singapore Country Risk Q4 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.ContentsCurrency Forecast
  • Singapore's MAS Likely Easing To Weaken SGD In Short Term
    • TABLE: CURRENCY FORECAST
  • 10-Year Forecast
  • The Singaporean Economy To 2028
  • Solid Growth Trajectory To 2028
    • TABLE: LONG-TERM MACROECONOMIC FORECASTS
  • Political Outlook
  • Domestic Politics
  • Concerns Over The Application Of Singapore's 'Fake News' Law
    • TABLE: POLITICAL OVERVIEW
    • TABLE: 2019 WORLD PRESS FREEDOM INDEX
  • Long-Term Political Outlook
  • Political Liberalisation Likely To Be Slow Over Next Decade
  • Operational Risk
    • TABLE: OPERATIONAL RISK
  • Labour Costs
    • TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
  • Legal Environment
    • TABLE: BUREAUCRATIC PROCEDURES
    • TABLE: BUREAUCRATIC BARRIERS
  • Global Macro Outlook
  • Global Growth Deceleration, But Policy Increasingly Supportive
    • TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
    • TABLE: DEVELOPED MARKETS - REAL GDP GROWTH, % y-o-y
    • TABLE: EMERGING MARKETS - REAL GDP GROWTH, % Y-O-Y
  • Index Tables
    • TABLE: SINGAPORE - MACROECONOMIC DATA AND FORECASTS
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