Singapore's economy will bounce back

published 17 July 2020

By Singapore standards, last Friday’s election delivered a surprising result, writes Hannah Beech in The New York Times. The ruling People’s Action Party won again, but by a “narrower margin than usual”. With only 27 deaths for a population of 5.8 million, the virus is not the problem, says William Pesek in Nikkei Asian Review. But as one of the world’s “most cosmopolitan city-states”, Singapore looks vulnerable to the rising forces of deglobalisation. The electorate is dissatisfied with high living costs, while an economic model supported by “cheap, imported labour” has stoked social tensions. With neighbours Indonesia and Vietnam developing fast, Singapore is starting to look like “an expensive enclave in a more affordable neighbourhood”.

A small and open economy, Singapore has been battered by the collapse of global trade. GDP plummeted by 41.2% on an annualised basis during the second quarter. The Straits Times index has lost a fifth this year. Still, analysts are feeling positive, says Abhishek Vishnoi on Bloomberg. The election has yielded a parliament with more opposition MPs, mitigating the usual problems of “groupthink”, says Justin Tang of United First Partners. The boost to Singapore’s democratic credentials from a more credible opposition will enhance its bid to supplant Hong Kong as Asia’s top financial centre, adds economist Prasenjit Basu.