What does Obama's re-election mean for Singapore?

Brace yourselves for a knock-on-effect, said experts.

Barack Obama has been re-elected as United States President to a second term beating Republican challenger Mitt Romney.

Here's what economists got to say on what his re-election mean for Singapore economy:

Ramkishen S. Rajan, Managing Editor, Journal of International Commerce, Economics and Policy (JICEP)

First and foremost, the outright victory of one of the candidates removes the uncertainty that might have existed if the elections remained hanging in balance as in 2000.

That is positive for US and global markets. The reelection of Obama specifically will also ensure a degree of continuity in domestic economic and foreign policies rather than having to wait till January 20 or so for an entirely new (Romney) team . While there will be some inevitable changes/new faces in the Obama administration, the basic policy trajectories and vision will be intact.

Obama clearly has shown far more interest in Asia and Asian economic and security initiatives (APEC, ASEAN, East Asian Summit, etc) than the Bush regime before him or what Romney outlined in his speeches in the run up to the elections. From Singapore's and Asia's perspective, the reelection of Obama also ensures that Bernanke will remain Fed chairman for some time to come.

Accordingly we can expect a continuation of the low interest rate environment (QE) which in turn will have implications for regional currency strengthening as well as possibility of continued real estate pressures which need to be tackled via macro prudential measures. Singapore, Hong Kong and a few other Asian countries need to be extremely concerned about the extent of exposure households and financial institutions have to the overheated real estate sectors.

Lastly, as with any second term president, it is likely that Obama will be focused on creating a legacy. That requires that he be much more conciliatory towards the Republicans in the house and Senate and aim to work with them in a constructive manner to undertake the necessary fiscal and structural reforms needed to ensure that the US regains its economic vitality going forward.

A robust US economy is vital to countries like Singapore both from an economic and strategic perspective. At least now that the elections are done and dusted the US policymakers can focus attention on dealing with the immediate challenge of the looming fiscal cliff.  

M Ramesh, Professor, Lee Kuan Yew School of Public Policy, National University of Singapore

Singapore should expect more of the same during the second term. Singapore has had a remarkably warm relationship with both Democratic and Republican US Presidents and there is no reason to expect any change in the near future. The US economy will hopefully pick up and Obama will be under less pressure to talk tough on China which has had the risk of putting Singapore in a diplomatically awkward situation.

JUSTIN HARPER, Market Strategist, IG Securities

I think the first thing it means for Singapore is a sense of relief. Traders are aware of Obama’s economic policies and his stance on Asia. But Mitt Romney presented an unease about his policies regarding Asia, China in particular. This uncertainty was present in the last few days of trading across the region.

Obama has pledged to keep interest rates low and inject liquidity into the US economy via QE3. Markets had factored this in and were in danger of sliding if Obama lost the election and QE3 was scrapped.

However, neither Romney or Obama are more equipped than the other at dealing with the fiscal cliff of $600 billion of tax hikes and spending cuts that kick in next year.

In one way the presidential election was a political sideshow. It doesn’t matter who sits in the White House. The cold hard reality is that the US economy is struggling to recover and needs a miracle to avert another financial crisis if $600 billion is withdrawn from the US economy next year.
Romney talked of China being a currency manipulator and many feared trade relations with the US and China would suffer if he came to power.

This would have had a knock-on effect on the rest of Asia.

The fact that he didn’t win the election must be good news for the region. But it is more a sense of relief among traders rather than anything more substantial.

Kanti Bajpai, Professor, Vice-Dean, Research, Lee Kuan Yew School of Public Policy, National University of Singapore

I think it means continuity with Singapore, first of all. At a time when there are big changes due in Asia, this is important. China is making a once-in-a-decade leadership change, Japan will go to the polls shortly, so will South Korea, and India too will hold its general elections within 18 months.

The US and Singapore have built strong economic and strategic ties, and Obama’s return to the White House means that there will be continuity for Singapore in a key relationship.

Under Obama, the US economy has slowly gained speed – his return to office means that there will also be greater predictability in the world economy. This also is good for Singapore.

The key worry in the US will be how the political divide, which will likely deepen with Obama’s re-election, will affect its economy. There is a fiscal cliff ahead, and avoiding it will require bipartisanship. The House of Representatives will be under Republican leadership, presaging difficult days ahead for Obama.

LEE Yoong Yoong, Research Associate, Institute of Policy Studies

With Obama’s re-election, I believe this means an extension of the status quo and certainty, not just to Singapore and Asia, but more importantly, to Wall Street and the US economy.

I expect nothing much will change, and there will continue to have ultra-low interest rates. The agenda is still to reduce the trillion dollars deficit, and the President will do something to minimise the effect of tax increases and spending cuts. He now has the mandate and motivation to continue to kick the can down the road, so the chances of having a near future recession should be less now. On a global basis, there will be less China-bashing, which can only be good for the international economy, and for a small open economy like Singapore. 

Vito Henjoto ,Technical Analyst for Asia Pacific Region for GFT

On balance Mr Obama’s re-election seems to be a positive move for Singapore, simply on the basis that the current US foreign policy is broadly working in the Asia Pacific region as a whole. The big risk was surely that Mitt Romney would quite simply rub China up the wrong way. The foremost issue was the threat of a trade war stemming from the undervalued Yuan that was repeatedly brought up on the campaign trail, despite Beijing holding so much US debt, but second to this had to be the reaction to China’s mounting aspiration on the global stage from a military perspective. The ongoing spat over sovereignty of various islands across the South China Sea – and the territorial water claims that come with this - is really something that should be resolved without intervention from quite literally the other side of the world, but Romney’s plans to bolster military spending over the next decade would risk us returning to the dark days of the 1960’s.

Whether the election result will directly have any influence on Singapore’s economy seems doubtful. The US has a whole raft of economic issues of its own that urgently need resolving, but there’s no suggestion at all that this would see any impact on the FTA between the two nations. The US remains a net exporter to Singapore and that’s precisely the sort of trading relationship that would appeal to whoever ended up in the White House