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Singapore Country Risk Report Q1 2019

Singapore Country Risk Report Q1 2019

Singapore's fourth generation leaders are showing signs of taking on a greater leadership role, boding well for the city-state's ongoing leadership succession process We believe that the next generation is likely to face more challenges than their predecessors amid a more vocal opposition However, Singapore's overall political outlook is likely to remain stable as the third generation leaders are unlikely to fade from the political scene

We continue to expect Singapore's economic growth to cool over the coming quarters as the economy will continue to face headwinds from the ongoing global trade conflict, a weak construction sector and rising interest rates

We expect Singapore's healthy fiscal position to remain intact over the coming years, which will underpin the city-state's favourable business environment The government is fiscally prudent and is already planning ahead to raise GST revenues over the coming years in a bid to cope with rising expenditures amid structural shifts such as an ageing population

The Monetary Authority of Singapore (MAS) increased the slope for the appreciation of the Singapore dollar nominal effective exchange rate for a second time in 2018 during its October 12 meeting, and we expect the central bank to tighten its stance further in 2019 Our view is informed by the MAS's hawkish stance in its statement, greater focus on rising imported inflation and optimism on economic growth despite risks from ongoing trade tensions between the US and China

We expect the Singapore dollar to remain range-bound against the US dollar over the near term as downside pressure from negative global trade developments will be offset by upside forces from the MAS's policy to modestly appreciate the SGD nominal effective exchange rate Major Forecast Changes

We have revised our 2018 average forecast for the Singapore dollar to SGD1 35/USD (from SGD1 36/USD previously) to reflect our expectations of roughly balanced forces in Q418

Key Risks

Despite Singapore's sound fundamentals, the confluence of weak external demand (led by a rapidly slowing Chinese economy) and domestic economic restruc-turing could give rise to a technical recession over the coming quarters Singapore Country Risk Q1 2019


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Singapore's Growth Slowdown To Persist Into 2019
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: TOP FIVE GOODS EXPORTS
TABLE: TOP FIVE GOODS IMPORTS
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
Monetary Policy
Monetary Authority Of Singapore To Remain Hawkish Amid Priority On Inflation
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Singapore National Day Rally 2018 Announcements Portend Higher Fiscal Spending
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE SOURCES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Singapore Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsCurrency Forecast
Singapore Dollar To Face Opposing Forces From Poor Trade And Hawkish MAS
TABLE: CURRENCY FORECAST
10-Year Forecast
The Singaporean Economy To 2027
Solid Growth Trajectory To 2027
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Singapore's Ruling PAP To Benefit From WP's Lawsuit Woes
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Political Liberalisation Likely To Be Slow Over Next Decade
Operational Risk
TABLE: OPERATIONAL RISK
Economic Openness
TABLE: TARIFF AND NON-TARIFF TRADE BARRIERS
TABLE: FREE TRADE AGREEMENTS
TABLE: FREE TRADE ZONE AND INVESTMENT INCENTIVES
TABLE: BARRIERS TO FDI
Utilities Network
TABLE: ELECTRICITY RISKS
TABLE: FUEL RISKS
TABLE: TELECOMMUNICATIONS RISKS
TABLE: WATER RISKS
Global Macro Outlook
Inflation And Policy Risks Rising
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: SINGAPORE – MACROECONOMIC DATA AND FORECASTS

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