Overall, there appears to be growing concern among Singaporeans about the city state’s economic prospects. The flow of economic news has not been encouraging, with a long litany of economic indicators looking weak, including purchasing managers’ indices, exports, industrial production, retail sales ex-cars, loan growth, equity market trading, commercial rentals and real estate activities. However, there are some incipient signs of better times, particularly in areas related to external demand. The key questions are whether Singapore will indeed enjoy better global demand and whether headwinds in the domestic economy might offset any upside from the external sector.

The global economy appears to be on the mend — with a bit of luck Singapore remains highly dependent on glob- al trade, so any recovery in external demand will be exceedingly good news. A case can be made that key parts of Singapore’s external market are indeed improving:

• There is little doubt that US economic growth is enjoying a strong revival. The Atlanta Federal Reserve Bank estimates that 3Q2016 economic growth is currently running at around 3.4% — the fastest growth in two years. Consumer confidence is improving, powered by growing confidence in job security and income growth, according to a survey by The Conference Board. Real personal incomes and spending have regained momentum as well. Interestingly, we are seeing the first, albeit very early, signs of a comeback in capital spending: Core capital orders rose 1.6% in July, the second consecutive month of growth. Business spend- ing on new capital equipment has been the missing ingredient in US growth and since Singapore’s exports are particularly sensitive to this variable, a recovery is especially encouraging.

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