Plans to Mitigate Risk of Singapore Going into Technical Recession

61 Mr Yip Hon Weng asked the Minister for Trade and Industry with the eighth consecutive month of decline in Singapore's non-oil domestic exports (NODX) in May 2023 (a) what are the plans to mitigate or reduce the risk of Singapore going into a technical recession amidst the challenging global economy; (b) how has the strengthening of the Singapore dollar affected the competitiveness of Singapore's exports; and (c) what are the measures to ensure that Singapore continues to be competitive in global trade.

Mr Gan Kim Yong: Singapore's exports have declined because global demand has weakened significantly due to the slowdown in major economies. The global electronics industry is also in a deep and prolonged downturn. Rising global interest rates to combat inflation have also dampened the economic situation. Like many central banks around the world, the Monetary Authority of Singapore (MAS) has tightened monetary policy to tackle high inflation. The appreciation of the Singapore dollar has dampened the effects of global price increases and eased cost pressures on businesses operating in Singapore, as well as on consumers. The underlying competitiveness of our economy, including as a manufacturing and trade hub, remains intact. Singapore is ranked top in Asia and fourth globally in the latest IMD World Competitiveness Ranking. In particular, Singapore continues to do well in areas, such as international trade and employment, while making gains in areas, such as people and talent management, as well as productivity and efficiency. Investments also continue to flow into Singapore, including into our manufacturing sector, a key export sector.

The Ministry of Trade and Industry (MTI) expects economic and trade conditions to remain sluggish for the rest of the year. Downside risks in the global economy have also risen, including the impact of recent banking stresses abroad on global financial and economic conditions. However, the ongoing recovery of our aviation- and tourism-related sectors, as well as the resilience of our consumer-facing sectors, will provide some support to the economy.

For 2023 as a whole, MTI expects the Singapore economy to expand by "0.5% to 2.5%", with growth likely to come in at around the mid-point of the range. While MTI does not expect a technical recession this year, the possibility cannot be ruled out, given increased downside risks to the global economy.

To help businesses navigate this uncertain global economic environment, the Government has introduced several near-term support measures at Budget 2023, including the enhancement of the Enterprise Financing Scheme (EFS) and the Energy Efficiency Grant (EEG). Should the business environment deteriorate sharply, we will recalibrate our measures to support businesses.

We also continue to strengthen Singapore's global trade competitiveness. First, we continue to expand our network of Free Trade Agreements (FTAs), as well as other economic agreements and partnerships, including digital and green economy trade agreements. Second, we are stepping up efforts to diversify and grow exports by helping our companies to access new markets, including those in Southeast Asia, Latin America, the Middle East and Africa. In particular, enterprises can tap on Enterprise Singapore's Market Readiness Assistance grant, as well as support from its network of 36 overseas centres and partners. Third, we are embedding Singapore more deeply into global supply chains, by strengthening our companies' regional distribution capabilities and improving the efficiency of our air and sea ports.

As we tackle these near-term challenges, we must continue to upgrade our economy for the long-term. We recently refreshed most of our 23 Industry Transformation Maps (ITMs) – which cover around 80% of our economy – to position Singapore and Singaporeans for our next bound of economic growth. We must implement these ITMs well, so that our firms stay competitive and our workers continue to have good job prospects.