2019 was a tough year for the global economy as a whole, with the Asian financial markets restricted by the volatility created by geopolitical tensions. If the first few months are anything to go by, the roller-coaster ride of last year is set to extend for the Singaporean economy throughout 2020. With more twists and turns ahead, economic stability may not be an immediately achievable goal.

Any period of economic difficulty has consequences for a nation’s trading sector, for businesses’ means of operation, and for the financial security of the average consumer. Here are the challenges that Singapore will face in those key areas in 2020.

Trade

The US-China trade dispute is not a problem unique to Singapore, as many countries are reliant on the US dollar as the dominant reserve currency and on China as a key trading partner. The trade war has restricted Singapore’s ability to import, export, and manufacture at an ideal rate, although January’s Phase 1 trade deal is evidence of improved relations. However, more improvements are needed before economies like Singapore can trade with the usual confidence. 

Investors who usually engage with foreign exchange markets may prefer to explore CFD trading options, where they can make long-term predictions on price movements in any direction. This allows traders to stay covered if the upcoming US presidential election fuels further market instability and undoes progress in the trade negotiations. Adapting to that instability will be one of the biggest challenges for Singapore in 2020.

Industry

The coronavirus outbreak has impacted on almost every type of industry, with governments across the world required to deploy special funds to keep companies afloat. Heng Swee Keat, the deputy prime minister, announced a package of S$5.6 billion(RM17 billion) in February to assist companies’ cash flow and protect workers’ wages.

The government has also committed to a delay in raising the goods and services tax, which will provide some relief to industries. However, there is no telling what the state of play will be once the coronavirus outbreak is completely contained. The biggest challenge for Singaporean companies will be getting back to business as usual, as quickly as possible. 

Labour

Unemployment reached a ten-year high in 2019, with a rate of 2.3% proof of a stagnating domestic labour market. Preparations for the digital transformation of Singapore’s workforce may prompt a much-needed reassessment about how to train and employ its labourers. With automation set to have a particularly significant influence on the healthcare and construction industries, employers will have a responsibility to retrain their workforce.

While this will be a challenge for companies, the rise of automation may counter-intuitively improve Singapore’s labour prospects. Developing and managing new technology may provide lucrative job opportunities for retrained workers.

Reasons to be cheerful?

While 2020 will be full of challenges for the Singaporean economy, it may force industries to adapt and become more resilient in tough times. Economic growth may have to wait, but a more pessimistic outlook for the US dollar opens the door for emerging markets like Singapore to prosper in the coming months.

A trade deal between the US and China will not only end the dollar’s surge, but also reinvigorate Singapore’s ability to import and export. Even if the Singapore government observed the Phase 1 deal with “guarded optimism”, it is optimism nonetheless.

Singapore’s trading and business sectors are facing a unique set of circumstances, which can pose challenges at both an individual and an industry-wide level. While the immediate outlook is not encouraging, the Singaporean economy looks well-placed to take advantage of more favourable financial conditions that may arrive in the coming months. – April 3, 2020.

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