5 Sectors Expected To Drive Singapore 2020 Economic Growth
The global economy came under immense pressure in 2019 amidst soaring geopolitical tensions as well as trade wars pitying the U.S and other economic powerhouses. Amidst the soaring fears of global recessions, a number economies led by Singapore escaped unscathed, to grow at a considerable rate. Singapore’s economy succeeded in averting a technical recession in the third quarter with full-year growth coming at the lower end of the $0.5% to 1% growth forecast.
Looking ahead, Singapore 2020 promises to be an exciting year as the city-state economy looks set to grow at between 1% and 2%. One of the biggest challenges that could take a toll on the island nation’s economy in 2020 is climate change.
Singapore faces its biggest test in the form of rising sea levels triggered by floods and global warming. Prime Minister Lee Hsien Loong has already warned that the economy might need close to $100 billion, to counter the effects of climate change. Singapore 2020 economy could also come under pressure on rising U.S-China tensions beyond trade as well as China’s economic slowdown compounded by other geopolitical hotspots.
Amidst the tailwinds, a number of sectors look set to outperform on a favorable economic environment. The services and construction sectors look set to be at the forefront of driving Singapore 2020 economic growth. The manufacturing sector is also expected to post modest recovery.
Here are the top five sectors poised to be at the center of Singapore 2020 Growth.
According to UOB Economics and Market Research, the services sector will be at the center of Singapore 2020 economic growth. Finance and insurance segments will be some of the key drivers on this front, with the country’s financial system expected to expand even further. The segment should experience a 3.5% growth.
Finance and insurance should have a favorable hiring environment backed by a net employment outlook of plus 15%. Digital transformation should continue to gain traction leading to the creation of more job opportunities crucial to the Singapore economy.
Accommodation and food service clusters are also expected to grow by 2% year-over-year, consequently have a positive impact on the overall economic growth. Wholesale and retail trade sectors are also expected to recover and grow 0.4% year over year.
The manufacturing sector has always been a key driver of the island nation economy contributing between 20% and 25% of the overall GDP. Similarly, the sector looks set to be a key driver of economic growth in 2020 despite being a key drag to overall growth in 2019.
The manufacturing sector should recover and expand by 0.7% in 2020 at the back of industrial production growth. Some of the key industry clusters poised to be a key driver of the manufacturing sector include electronics as well as chemicals and biomedical sciences. Other emerging manufacturing clusters poised to make significant contributions to the economy include medical technology as well as aerospace engineering and clean energy.
Mining & Constructions
Technological innovations and financing are slowly propelling Singapore into a mining hub. The two segments have, in recent years, emerged as key drivers of the island nation economy as the country is at the crossroads of metals and mineral supply in Asia pacific. In addition, firms in the country continue to provide a wide range of crucial services for mining firms around the world.
The fact that some of the biggest mining companies in the world led by BHP Billiton, Rio Tinto, and Vale have already set shop in the Republic underscores how the segment is poised to play a pivotal role in economic growth in years to come.
The fact that the country is close to key mining giants in the name of Australia, Indonesia, as well as China also affirms the importance of the two segments on economic growth. Similarly, the country is better known as a hub of oil and gas.
Singapore’s mining industry comprises of more than 300 companies employing thousands of people. Employers in the country expect the Net Employment Outlook for the segment to stand at plus 12% in 2020.
Global Economic Improvement
Singapore’s economy grew by a partly 0.5% in 2020 in part because of the effects of the global economic slowdown. With things poised to improve in 2020, the economy could receive a significant boost.
For starters, the country’s oil exports are poised to recover to 1.6% in 2020 after contracting 9.1% year over year in 2019. While electronic exports look set to contract by -3.2% in 2019, non-electronic export should expand by 2.4% supported by healthy shipments of pharmaceutical products and chemicals.
Inflation should tick higher, with consumer prices poised to accelerate to 0.9% this year from 0.7% in 2019. Consumer price should be driven by falling electricity prices as well as a reduction in services dependency ratio from 40% to 38%.
The Association of Southeast Asian Nation is on track to become the fourth largest market in the world. Opportunities are slowly cropping up thanks to a robust tech industry that continues to attract multinationals from all over the world.
Similarly, Singapore’s tech industry continues to grow at an impressive rate and poised to be a key driver of the economy as it continues to enable almost every industry. For instance, the internet economy is growing at an average of 20-30% annually.
Singapore is already home to 80 of the world’s top 100 tech firms. The likes of Google, LinkedIn, Huawei Baidu, and NVIDIA have already set shop in the country, consequently creating thousands of jobs to locals. Similarly, the companies have given rise to new opportunities that should continue to drive the city-state economy. Increased investments in Artificial Intelligence, virtual reality, as well as blockchain, should be at the forefront of spearheading growth in the tech industry.
Singapore experienced a roller-coaster ride in 2019 due to headwinds in the financial markets as well as the global economy. Geopolitics also took a toll on business sentiments. Fast forward things are finally looking up for the city-state economy as a good chunk of the global uncertainties have cooled off. Similarly, Singapore 2020 economy should grow between 1.5% and 2% driven by the above-mentioned sectors.