Monetary Authority of Singapore, which is the country’s central bank, warned that a continuing US-China trade war will negatively affect the country’s economy in the coming months and above all the country’s economic growth.
The World Trade Hub and Singapore Financial Center is playing a global barometer for the world economy because of its strong export that exceeds almost twice the country’s production.
Since the beginning of this year, Singapore authorities have been warning of the forthcoming effects of the US-China trade war, which are among the most important partners in the country. So far, the US has imposed import duties on Chinese goods worth 250 billion USD, which has lowered China’s economic growth rates to its lowest level in a decade.
“Commercial frictions so far had a limited impact on Singapore’s economy, but the negative spread may become significantly more noticeable at the end of this and early next year”, said the Monetary Authority of Singapore (MAS). “This may pose some risks to economic growth over the coming quarters”, adds the statement.
According to the forecasts of the Monetary Authority of Singapore, the GDP growth of the country should reach the upper limit of 2.5-3.5% in 2018 and moderate moderate in 2019.
The electronic segment, which is the backbone of the local manufacturing sector, is one of the areas that could be affected as soon as possible due to its supply chains with China.
Another industry, possibly plagued by the trade war, is transport. Singapore has one of the busiest ports in the world that connects the country with the rest of Asia and the West.
According to a World Bank report, the preferences of US companies that have business in China are to move their production to Vietnam.
“The shifting of production in Southeast Asia could have positive effects for Singapore”, said the Monetary Authority of Singapore.
Despite the risks of economic growth, Singapore has tightened its monetary policy because of continued uncertainty in the international trading environment, which is in line with the dynamics of real and nominal economic variables.