Singapore—On Monday, October 14, Singapore woke up to the news the country had avoided a recession, leading observers to wonder how this new development would affect the scheduling of the next General Election (GE) due before April 2021 but believed to be called in as early as the next few months, especially with the announcement in September that the Electoral Boundaries Review Committee (EBRC) had been convened.
In the past voters have kept the ruling People’s Action Party (PAP) in power during times of economic uncertainty, which caused the speculation that the GE would be called for earlier than expected.
In the second quarter of this year, Singapore’s economy contracted by 2.7 percent, one of the worst quarters the country has seen in years. But data released by the Government on October 14, Monday, showed a growth of 0.1 percent, therefore missing a recession, which is defined as experiencing a contraction for two successive quarters.
The South China Morning Post (SCMP) quotes political science professor at the National University of Singapore Bilveer Singh as saying that the economy is just one of the various factors that Prime Minister Lee Hsien Loong will consider in calling for the elections.
The next election is considered to be a test for the PAP’s 4G or fourth generation of leaders.
Professor Singh said, “Just because Singapore is out of a technical recession doesn’t mean anything.” He added that the recent announcement concerning the increase in the prices of electricity and public transport makes it more likely that the GE may be scheduled for next year instead of the remaining months of 2019.
He told SCMP’s This Week in Asia, “The voters are waiting for some ‘goodies’ and this will probably come after the budget next year, or the earliest, in January just before the Lunar New Year. The ground must be sweet enough for the voters to vote for the PAP.”
A statement released by the Ministry of Trade and Industry (MTI) said, “Growth during the quarter was primarily supported by the finance and insurance sector, the other service industries and the business services sector.”
Improvement was seen in the construction and manufacturing sectors in the third quarter. Construction had decreased by 4.2 percent in Q2, but only 1.1 percent in 3Q, while manufacturing, which had fallen by 6.5 percent in 2Q, only fell by 0.4 percent in Q3.
According to the MTI, contraction in the manufacturing sector was because of “output declines in the electronics, precision engineering and transport engineering clusters, which more than offset output expansions in the chemicals, biomedical manufacturing and general manufacturing clusters.”
However, since Singapore’s economy is heavily trade-reliant, the Monetary Authority of Singapore (MAS) separately announced that it would be easing monetary policy, for the first time in over three years.
It further said that it expects that growth will “slow discernibly” this year, in comparison with the previous two years, but that it also expects to stabilize in 2020 “barring further shocks”.
“The drag on GDP growth exerted by the manufacturing sector has intensified, reflecting the ongoing downturn in the global electronics cycle as well as the pullback in investment spending, caused in part by the uncertainty in US-China relations,” MAS said.
In an interview with Bloomberg in September, Singapore’s second minister for finance and education, Indranee Rajah, said “We’re not new to difficult economic situations, we’re not new to recessions. If we need some safety nets and buffers, then our agencies will have to step in.”/ TISG
Read related: Singapore economy experiences growth but less than what was predicted by economists
Singapore economy experiences growth but less than what was predicted by economists