Singapore With Singapore's export orders and local business investment figures appearing to gain positive momentum this year, Institute of Chartered Accountants in England and Wales (ICAEW) is edging up its gross domestic product (GDP) growth estimates for the city state to 2.4%, up from 2% and 1.9% in 2016 and 2015 respectively.
This is according to ICAEW's latest Economic Insight: South East Asia report, which infers from Singapore's monthly trade data that exports are beginning to recover.
For example, Purchasing Managers Index (PMI) manufacturing and electronic surveys have registered above 50 for six consecutive months with new orders pointing to
ongoing demand for exports, notes the institute in a Wednesday press release.
ICAEW also observes tentative signs that local business investment may be beginning to recover, as fiscal spending is forecast to be mildly stimulatory following Singapore's Budget announcement that a number of infrastructure projects will be going forward.
As a result, the institute believes investment is likely to be a lesser drag on growth this year as government spending picks up.However, ICAEW cautions that given the uncertain global backdrop, unstable recovery in external trade is to be expected.
This includes the risk of what the institute deems "significant knock-on effects" in the case of increased protectionism as advocated by US president Donald Trump, in addition to further rate hikes from the US such that domestic interest rates could "snuff out any recovery in business investment before it gathers traction".
There are various factors limiting Asia's economic recovery, so we remain cautious on the outlook for the region," comments ICAEW economic advisor & Oxford Economics lead economist, Priyanka Kishore.
We do expect export contribution of net export growth to fall slightly this year, with the bulk of growth in Asia generated by domestic demand. This is similar to trends visible since 2011.
Adds Mark Billington, regional director, ICAEW South East Asia While there is an overall improvement in confidence, there are wider global and political factors that continue to pose a risk, not least in the US. Countries in South East Asia will need to focus on sustaining their recovery and hedge against the potential ripple effects.
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