Singapore—Supply chains hurt by trade dispute
World Risk Developments July 2019
The export-driven Singaporean economy has been acutely affected by the synchronised downturn in global manufacturing due to the ongoing trade tensions between the US and China. The Singaporean Ministry of Trade and Industry has downgraded the high end of its full-year growth forecast from 3.5% to 2.5% amid weaker trade and industrial production (Chart).
The US and China are major economic partners for Singapore, and as an open economy, it is highly dependent on trade. Trade tensions do not directly impact Singaporean exports as they are not subject to increased tariffs between the US and China. Instead it is the impact on global supply chains that is significant for Singapore. Singaporean companies that produce intermediate goods, particularly electronic components, used as inputs in the production of China's exports to the US are expected to experience declining demand. In time, Singapore has the potential to leverage its strong trading networks and diversified sectors to seek new opportunities and alternative suppliers.