Singapore Gross Domestic Product (GDP) grew 1.2% in 2012 based on advance estimates. This performance was weak when compared with 2010 and 2011. GDP growth rate for 2010 was 14.8% and growth rate for 2011 was 4.9%. We are back in the bad years of 2008 and 2009 when the global economy was hit by the global financial crisis. In 2008, Singapore GDP growth rate was 1.7% and in 2009, it was negative 1.0%. As for next year, the forecast for GDP is between 1 – 3% growth rate.
The trouble with Singapore economy is that we are too dependent on export markets to grow our economy. When our trading partners such as European countries, the United States and Japan slow down we go along with them. Our domestic consumption and local construction activities cannot pick up the slack.
Challenge number one is for Singapore to grow our local economy in a weak global economic environment. Local businesses have also to navigate a tight labour market with resultant higher labour costs (unless there are large scale retrenchment). They have also to content with economic restructuring which is to raise productivity of 2 – 3 % per year. This can be difficult.
Challenge number two is volatility of investment markets. Most investment instruments from equity to bonds to currencies and others will remain volatile as consumer confidence fluctuates depending on the type of news received. The Eurozone crisis and the US fiscal position will continue to plague the markets in 2013.
Challenge number three is potential cooling of residential property market. (This is a personal reading of the situation.) Investors with investment properties must find tenants to fund mortgage repayments. This can prove difficult with slower economic growth in 2013.
Challenge number four is a social one. Getting people (foreigners and locals) staying in Singapore to be more civic-minded and gracious. I hope the nation can gel together to keep Singapore clean and we can be more magnanimous and courteous towards each other.
On that note, I wish you peace and happiness as we step into 2013!
Copyright © 2012, limkimtong for Living Investment
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