Negative growth might be the new normal.
The spectre of technical recession once again haunts Singapore as the manufacturing sector reels from low oil prices and escalating global uncertainty, according to a report by HSBC.
HSBC reckons that the risks posed by oil-related sectors and persistently weak numbers from the services sector suggest a "rising probability" of a recession materializing, which in turn might prompt the central bank to ease monetary policy to boost growth.
HSBC is particularly concerned about the oil-related manufacturing, which is feared to stay stuck in the doldrums following the oil price rout. HSBC noted that a fifth of Singapore's manufacturing industry is linked to oil prices, while the marine and offshore engineering industry makes up 10% of manufacturing output.
Despite these risks, HSBC still believes that Singapore will only experience one quarter of negative GDP growth this year.
"This is no cause for panic – negative sequential growth prints are set to become more common as Singapore’s potential growth slows as the economy remains vulnerable to the turning tides of the global economy," said HSBC.
In the latest Singapore Consumer Confidence Index by Nielsen, it was revealed that 60% of Singaporeans believed that the country is in recession, down from 70% in Q3.
“The slowdown in China has a direct and broad-based impact on businesses and jobs in Singapore as China is the largest export destination for the nation. Layoffs in the financial sector due to a changing business environment, weak macro economy and higher costs have also added to the rising concerns of job security and a lacklustre economy,” said Joan Koh, Managing Director, Singapore and Malaysia, Nielsen.
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