A key risk comes from the uncertainty over US-China trade tensions, which is likely to affect sentiments and business investments. This is in spite of last Friday’s ‘phase one’ talks, which saw the superpowers laying out terms for a trade truce.
The deal sees the US reducing some tariffs on Chinese goods, in exchange for increased Chinese imports of US agricultural, manufactured and energy products by US$200 billion ($270 billion) over the next two years.
Meanwhile, the US will maintain the 25% tariffs imposed on US$250 billion of Chinese imports, and half tariffs on US$120 billion of products from the current 15% to 7.5%. This reduction will take effect within 30 days of the signing of the deal, which is slated for the first week of January. The nitty gritty details of the agreement appear murky and will be delineated come January.
On a micro level, Singapore is also challenged by cybersecurity threats, climate change, aging and geopolitical instability, the economists note.
To this end, they suggest that the Monetary Authority of Singapore (MAS) could consider further easing monetary policy if trade tensions re-escalate or the global economic conditions weaken.
This can be supplemented with fiscal measures such as spending on socioeconomic needs such as housing, palliative care and early childhood education, as is currently being done.
