Singaporeans would be worried by flash estimates pegging economic growth at 0.1 per cent in the second quarter of this year. This is the lowest growth since the economy contracted by 1.2 per cent in the second quarter of 2009 during the Great Recession. Similarly, exports have suffered their biggest fall in more than six years: Non-oil domestic exports fell by double digits for the fourth straight month in June, with shipments in the key electronics sector sinking by around a third. What is also worrying economic watchers is that there appears to be little hope of a recovery in the second half of the year. Instead of economic numbers stabilising, the pessimistic view is that a further decline is possible, with the pace of the decline having accelerated. Gloomy as that may be, it is important to look beyond the figures.
The numbers reflect Singapore’s exposure to a global economy buffeted by the trade dispute between the United States and China. That dispute reflects America’s desire to decouple its economy from China’s even at the cost of disrupting the global supply chains that have enabled China to benefit from the US as a source of investment and a major destination for exports. Singapore, being a key node in a globalised world, is inevitably taking a hit. Countries that operate further along the globalised production chain are at lesser risk. But Singapore has no option but to stay on a global course that has brought it prosperity. A city-state with hardly any natural resources cannot but be globalised. Singapore cannot retreat into an exclusively domestic economy given that trade represents three times its gross domestic product.