From Asia Times, January 5:
Trade-reliant city-state avoided economic contraction in 2023 but rising costs-of-living will challenge policymakers mightily in year ahead
Highly trade-dependent economies like Singapore will be hardest hit by these monetary tightening measures. Singapore’s trade-to-GDP ratio was 336.86% in 2022, an increase of 3.52% from 2021.
Since October 2022, Singapore’s export-led manufacturing sector, which comprises approximately 20-25% of its GDP, has remained subdued due to the decrease in global demand.
After a pandemic-fuelled boom, demand for consumer electronics has tapered off US-China trade disputes and other geopolitical uncertainties have also adversely impacted Singapore’s semiconductor industry.
The woes of the semiconductor industry have already taken a toll on the manufacturing sector overall, which shrank by 2.6% year-on-year in the fourth quarter of 2022. But the drop in manufacturing output eased to 2.1% year-on-year in September 2023 from an 11.6% decline in August 2023.
One of the key reasons is the demand for artificial intelligence, which has seen output in the electronics sector rise by 12.7% year-on-year in September 2023 and 14.8% in October 2023. The continuing US-China chip war has also seen Western chipmakers and suppliers moving to increase their production bases in Singapore....
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