Singapore economy stays in slow lane, with more bumps ahead

Singapore's already-bruised economy faces another difficult year ahead, especially if rising opposition to globalisation impacts international trade.

The Ministry of Trade and Industry (MTI) said the country will likely avoid a technical recession this year, but growth will remain slow, and 2017 will bring its challenges.

The ministry yesterday narrowed its growth forecast for 2016, now tipping growth of 1 per cent to 1.5 per cent for the full year, from an earlier estimate of 1 per cent to 2 per cent.

This updated forecast came as the MTI's latest Economic Survey of Singapore showed that the economy expanded 1.1 per cent in the third quarter from the corresponding period a year ago - up from earlier estimates of 0.6 per cent growth.

Companies that have cut down their workforce in 2016

  • Tripda

    Rocket Internet's carpooling app, Tripda announced earlier this month that they would be organising a global shutdown of the platform.

  • Autodesk

    Autodesk a design-focused software announced early month that they will be laying off 925 positions, around 10 per cent of their entire workforce.

  • Yahoo

    Recently tech giant Yahoo confirmed that would be shedding 15 per cent of their entire workforce, and its also exploring other "strategic alternatives".

  • Yahoo

    Employees in Yahoo's Singapore office were notified of the layoffs on Feb 18.

  • Rakuten

    e-commerce platform Rakuten announced in Feb 2016 that they would be shutting down all their operations in Malaysia, Singapore and Indonesia.

  • Rakuten

    The platform probably faced a significant number of challenges in Malaysia, and they will be withdrawing to focus their efforts in countries like Japan and Taiwan.

  • Bombardier

    Bombardier will be cutting their workforce by about 7000 over the next two years.

  • Bombardier

    They will be cutting 580 jobs from their Belfast operation this year and potentially another 500 the following year.

  • Shell

    Multinational oil and gas company, Royal Dutch Shell operates in more than 70 countries and employ more than 94,000 people worldwide.

  • Shell

    Given the fact that oil prices have dropped by almost 70 per cent in less than two years, the company has already started cutting 10,000 jobs to try and recover from all their losses.

  • Devon Energy

    Devon Energy, a US oil producer, mentioned that 700 people would lose their jobs by the end of the Feb 18, 2016, and this is all in response to the current commodity price environment.

  • Top Glove

    Malaysian company Top Glove is currently the world's largest maker of natural rubber gloves with operations in 27 countries. The company announced that they would cut their foreign labour by 5 per cent due to rising costs and increasing automation.

  • Barclays

    Some 100 Barclays employees in Singapore were axed on Jan 21 in a drastic cost-cutting exercise which saw the bank exit multiple businesses across Asia.

  • Standard Chartered

    Global bank Standard Chartered had laid off a number of people in Singapore late last year as it axed 15,000 jobs globally.

  • Standard Chartered

    Its previous workforce globally was at 86,000, and currently employs about 7,000 staff in Singapore.

  • HSBC

    HSBC has announced that they will be freezing salaries and freezing hiring in 2016 globally in the battle to cut costs, affecting 3,000 Singapore employees.

  • Resorts World Sentosa

    According to a report on Straits Times, more than 30 employees at Resorts World Sentosa (RWS) have been laid off earlier in February.

  • Resorts World Sentosa

    However, the lay offs was due to overstaffing and it is not an isolated case. There are currently about 12,000 people working at Resorts World Sentosa.

  • Maersk

    Maersk Line, one of the world's top container shipping companies, recently merged its Singapore and Hong Kong regional offices. Last November, it also shared new plans to reduce its network capacity and announced that it will be cutting 4,000 jobs.

  • STMicroelectronics

    STMicroelectronics will cut about 1,400 jobs and close its loss-making set-top box business, including 670 in Asia.

  • Goldman Sachs

    Goldman Sachs has been reducing the size of its investment-banking team in Singapore by about 30 per cent compared with the start of last year, according to a report from Bloomberg.

  • Credit Suisse

    Credit Suisse announced 4,000 job cuts globally, although no layoffs are expected in the Asia-Pacific region yet.

  • Royal Bank of Scotland

    Royal Bank of Scotland has also announced that they could be cutting as many as 80 per cent of the jobs in its investment banking unit over the next 4 years, and last year laid off "hundreds" in Singapore.

Compared with the preceding three months, the economy shrank 2 per cent in the July to September quarter. If output contracts again in this quarter, Singapore would enter a technical recession - defined as two consecutive quarters of decline in economic output.

But official forecasters think this is unlikely, said MTI Permanent Secretary Loh Khum Yean.

"MTI's view is that the Singapore economy should avoid a technical recession in the fourth quarter. Growth in the fourth quarter will be modest, supported by sectors such as electronics, and information and communications," he said.

Mr Loh noted that the growth outlook remains "modest". MTI expects the economy to expand between 1 per cent and 3 per cent in 2017. The United States is likely to grow at a faster pace, while key regional economies will also remain resilient.

However, risks like rising corporate debt in China and uncertainties over the timing and nature of Britain's exit from the European Union could weigh on prospects.

Mr Loh also flagged mounting "pushback against globalisation" around the world, which could further dampen global trade.

This trend is already hurting Singapore. Trade agency IE Singapore expects non-oil domestic exports (Nodx) to shrink 5 per cent to 5.5 per cent this year - a larger contraction than the 3 per cent to 4 per cent decline previously forecast. Nodx fell 5.4 per cent in the third quarter over a year ago.

DBS economist Irvin Seah, who forecasts growth of 1.3 per cent in 2017, pointed to a silver lining. "We are seeing tentative signs that things might be bottoming out, especially for the manufacturing sector. With oil prices bottoming, we might get less of a drag from the oil and gas cluster in the coming year."

The manufacturing sector, which makes up a fifth of the economy, has been showing gradual signs of recovery and performed better than expected, contributing to the upward revision in third quarter growth figures.

How Singaporeans can lower their cost of living

  • Nobody ever said Singapore was a cheap place to live in. But some things here are more expensive than others, and getting a cheap meal isn't impossible so long as you don't expect to be sitting in air conditioned comfort and waited on hand and foot.
  • Renting out unused rooms on your property to defray the cost of living can generate some passive income for yourself.
  • If you live in private property, rent out your place on a short-term basis on Airbnb whenever you go on holiday, so you earn some spare cash while you travel.
  • Go to polyclinics for basic medical and dental help (unless you employer pays for this). The $10.70 you pay for a consultation at a polyclinic is 1/3 the price you'd pay at a private clinic. The medicines also tend to be cheaper.
  • Use your $500 SkillsFuture and your $100 ActiveSG credit.
  • If you have kids of school-going age, check if they qualify for Edusave Bursaries and Awards and the Good Progress Award. The household income cap for the Edusave Merit Bursary is $6,000 as of 2015.
  • Anybody planning to buy HDB property needs to understand the different CPF Housing Grants.
  • Meals at mid-range to high-end restaurants have escalated in price over the past decades. While $10 could get you a decent restaurant meal in the 90s, these days you'll need to budget about $25 to $30.
  • On the other hand, while hawker food prices have not risen as quickly, and picking hawker centres instead of restaurants when you eat out means greater savings than before.
  • Public transport is way cheaper than driving, even if you rely mostly on taxis.
  • Alcohol is ridiculously expensive, but drinking in the streets is actually allowed before 10:30pm. Buying a beer from 7-11 instead of imbibing it at an overpriced Clarke Quay bar will save you almost $20.

Read also: Slowdown has already taken a toll on workers and businesses

Service exports set to be bigger part of economic pie


This article was first published on November 25, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.