Real exports of goods and services to grow 2% in 2017

Global demand is picking up after two consecutive years of slow growth.

According to RHB Research, the global environment is turning more reflationary.

In the US, economic growth is expected to be stronger this year, underpinned by sustained job growth, improving corporate earnings, and potentially major fiscal stimulus by the new administration.

“At the same time, the Eurozone has climbed out of deflation and into a more conducive growth environment, namely, low interest rates, a weak EUR, and an end to austerity initiatives in some countries. China’s economy has stabilised somewhat, despite still being in a structural slowdown, and Japan’s has just delivered four consecutive quarters of positive growth for the first time since 2005,” added RHB.

Here’s more from RHB Research:

Closer to home, ASEAN economic growth is expected to improve in 2017, backed up by rising commodity prices and higher export demand. Countries like Thailand and Indonesia, meanwhile, should also receive a boost from further realisation of respective infrastructure upgrading plans.

As such, we expect real exports of goods and services to grow 2% in 2017, from +1.6% last year, as:

i. The pick-up in G3 (US, Europe, and Japan) nations’ consumer demand would ensure Singapore’s electronics exports remain robust;
ii. Continuing infrastructure spending in neighbouring countries (such as One Belt, One Road) – and potentially in the G3 – to support machinery and petrochemical exports;
iii. China’s continued restructuring towards a consumption-based economy bodes well for Singapore’s services exports.