Economists Dim Singapore’s Growth Outlook amidst 2.2% Pick-up
Singapore’s economy picked up by 2.2% in the Second Quarter and the government has been quick to assure investors that this pace can be maintained. This comes after a reviewed 2.1% growth in Q1 and there had been hopes that this expansion can be maintained for the second half of the year. Sectors such as retail have helped boost the economy but analysts now say there is nothing to celebrate yet.
While the expanding economy is seen as a basis for long-term revival, economists are not cheering yet and most of them are downright pessimistic. Irvin Seah, a DBS financial expert has been a notable figure in analyzing the country’s economy. In his latest reaction to the pick-up, the economist who had earlier projected a 1.5% percent growth for 2016 was still adamant.
According to the renowned financial expert, while the economy records a 2.2% expansion, the overall picture pointed to weakness in overall growth. His assessment is supported by the fact that all major industries recorded growth of less than 1%, which points to a stunted momentum in the overall economy.
Seah has also highlighted the challenges in the manufacturing sector where the outlook remains negative. While the service industry has rebounded, Seah is concerned that growth in all sectors remains slugging. The volatility in the financial markets, risk aversion and reduced loan growth will also stunt growth in financial services again affecting the entire economy.
The DBS financial expert’s sentiments are similar to those expressed by Vishnu Varathan, a Mizuho financial guru. In a report regarding the positive outlook, Varathan argues that the 2.2% growth in the second quarter doesn’t qualify as an ample assurance or an absolution. While the slight growth traction cannot be ignored, the economist feels that there are myriad risks on the way including the ripple effects of Brexit, which will effectively negate the mild growth being touted today.
These views have been supported by various economic experts polled by global organizations. Weiwen Ng who is an economist with ANZ advises caution when evaluating the country’s growth. Weiwen cites the shock on labor markets in case global shifts spill into Singapore’s economy. The economist is of the view that the country’s economic stance, which is largely expansionary faces more exposure in the shifting global landscape of Brexit and other externalities.
While the economy might have picked up, slightly economists are advising caution and a more global outlook to mitigate risks in investment.