Cheap oil, weak trade dash Singapore’s economic growth dreams

Marine and offshore firms will suffer more.

If local corporates thought that 2015 was bad for business, then they shouldn’t hope that things will get any better this year.

The Ministry of Trade and Industry (MTI) warned that exports and manufacturing output are unlikely to get a significant boost this year, as weak global demand and persistently depressed commodity prices continue to take a toll on domestic growth.

“Even though global growth is expected to improve, the continued slowdown in China, the services-driven nature of growth in the US, as well as the trends of in-sourcing in China and the US, may mean that external demand for our exporters may not see a significant boost this year,” the MTI warned in its annual Economic Survey of Singapore.

“Second, lower oil prices have weakened the prospects for new rig orders for firms in the marine & offshore segment, and heightened the risks of further deferments and cancellations of existing orders. There could also be negative spillover effects on firms in the precision engineering cluster that support the oil & gas industry,” the MTI added.

The construction sector—another bulwark of Singapore’s economy—will also experience slower growth this year, the MTI warned.

“The prospects for the construction sector have weakened in 2016 on the back of the drop in contracts awarded in 2015 and continued sluggishness in private sector construction demand. Finally, labour constraints will continue to weigh on the growth of labour-intensive services sectors such as food services,” said the MTI.