Stronger and more sustained economic recovery needed

This article is more than 12 months old

The world economy - mired in a slowdown since the 2008 global financial crisis - finally seems to be on the upswing, and this rising tide has helped buoy the outlook for small and trade-dependent Singapore.

But questions remain over whether this pick-up will persist and how strong it will be.

The Monetary Authority of Singapore's (MAS) Macroeconomic Review released yesterday noted that the Singapore economy has picked up in recent months but growth has been volatile and uneven.

Manufacturing, which makes up a fifth of the economy here, is benefiting from a more positive global outlook and strong demand for electronics.

Factory output logged another better-than-expected performance last month, jumping 10.2 per cent over the same month last year - stronger than economists' expectations.

But the growth pick-up in manufacturing has not been broad-based - segments such as marine and offshore engineering are still suffering amid the lacklustre oil price outlook.

Ultimately, a stronger, more sustained global economic recovery is needed for the upswing in growth to broaden beyond manufacturing.

Last year, the world economy grew 3.1 per cent.

The International Monetary Fund (IMF) now forecasts that growth will be 3.5 per cent this year - up a tad from its forecast of 3.4 per cent in January.

The IMF said chronically weak advanced economies are expected to benefit from a cyclical recovery in global manufacturing and trade that started to gain momentum from the middle of last year.

However, this pick-up comes after many years of tepid growth and could still be derailed by shocks.

There are significant risks on the horizon, including a backlash against openness and trade in developed economies. - CHIA YAN MIN

EconomyMonetary Authority of SingaporeFinance