Trade-reliant Singapore fears global collapse if trade war prolonged
A BROADLY based loss of confidence in international markets is in the offing if the Sino-US trade war becomes prolonged, warns Singapore Trade and Industry Minister Chan Chun Sing
A BROADLY based loss of confidence in international markets is in the offing if the Sino-US trade war becomes prolonged, warns Singapore Trade and Industry Minister Chan Chun Sing.
A collapse could return the global economy to 'where we were 100 years ago, near the Great Depression era when everybody thought that it was better for them to close their borders and work in isolation,' he said.
That kind of scenario is a 'great risk for the entire world,' he told Bloomberg.
That would have 'a huge impact' and slow economic activity, said Mr Chan, one of several men seen as a leading candidate to become the next prime minister.
'In the medium term, some countries benefit and some countries lose,' Mr Chan said. 'What is more worrying for everyone is that the entire global economy loses confidence.'
It's still early days and that worst-case scenario hasn't materialised yet, the minister said. But it's a worry for a small, open economy like Singapore's, where exports amount most of GDP.
Singapore has found itself in the crossfire as its No 1 and No 4 trading partners duel with tariffs, and where exports amounted to most of GDP in the city state.
'If that coincides with a global downturn, then I think we will be in for a rough ride,' he said.
Mr Chan said Singapore's economic fundamentals are 'still alright' and fluctuations in the data can be expected.
'The PMI will go up and down,' he said. 'There are some cyclical factors. The concern is the longer-term structural shifts.'
For now, the economy is still growing solidly, with economists in a Bloomberg survey forecasting expansion of about 3.2 per cent this year, compared with 3.6 per cent in 2017.
Singapore's warning comes as the world's financial elite prepare to gather in the Indonesian island of Bali for the World Bank and International Monetary Fund's annual fall meeting.
Global trade risks will likely dominate talks, with IMF head Christine Lagarde already signalling she's not as optimistic of the fund's 3.9 per cent global growth forecast for this year and next.
Said Mr Chan: 'We need to work with like-minded partners to uphold the global trading system, to continue to have the free-trade agreements either bilaterally or multilaterally, to make sure that the global trading system remains open, free, and rules-based.'