This article was first published in Today
Following better than expected economic growth this year of between 3 and 3.5 per cent, the Singapore government is forecasting GDP growth of between 1.5 and 3.5 per cent next year.
The Ministry of Trade and Industry said that while stronger growth in the United States as well as some emerging and developing economies could aid global growth, the picture may not be as rosy in some of Singapore’s key external demand markets, such as China and the European Union.
What can we expect across the different sectors and what will weigh on the minds of business leaders and workers as they across over to the new year?
As has been the case in recent years, growth across Singapore sectors will be uneven. The brightest hopes lie in manufacturing and trade-related sectors. In financial services, figures should improve next year due to a surge in deal-making opportunities (842 of the 1,420 deals worth US$101.9 billion (S$136.96 billion) were recorded in Singapore from last December to November) in mergers and acquisitions, largely driven by GIC and Temasek Holdings in consortiums.
The construction sector may remain lacklustre due to the continued weak demand in private and industrial projects. But things may start to set to change, as construction demand is forecasted to reach up to S$35 billion by 2019 from S$26 billion last year.
The Building and Construction Authority recently announced that it will train 80,000 personnel in construction technologies and innovation by 2025 to drive productivity improvements in the sector.
In the longer run, the sector to watch is manufacturing, which will ride on heightened global demand, increased semi-conductor production and higher-value products to continue on a growth path that started in end 2015.
Retail and food and beverage picked up steam after the first half of this year but the rise of e-commerce and technology disruptions continue to pose longer-term challenges. The marine and offshore engineering sectors that have been consistently hit hard by low oil prices for the past two years is expected to remain weak in 2018.
The economic outlook looks much better in Asia. Growth in Asean economies is expected to stay resilient with strong support by domestic demand and merchandise exports.
Today, the principal difficulty for CEOs is to jettison old assumptions and accept new ones, particularly between the wealth of digital data available online and the physical world in which it is applied in new markets. Speed in applying technology in business is also of critical importance.
According to the latest KPMG Global CEO Outlook, speed-to-market and innovation are high strategic priorities for CEOs in Asean. Respondents say that a clearly-articulated digitisation strategy results in delivery of faster decision-making and strengthens customer relationship, which increases a firm’s overall productivity.
For the working population, the search for new skills in the digital space and engineering science will be crucial in lieu of current sectoral trends.
Upscaling the ability of employees to explore new terrain within regional emerging markets will be important for many companies, including small and medium enterprises.
On the wider front, Singapore has made a big push for growth in the digital economy. Plans are underway to enable cashless payments on a wider scale, enhance digital transactions and to promote start-ups in new and emerging industries.
As Singapore companies gear up for 2018, they must also be ready to deal with external shocks.
As systems change, the world is evolving with geopolitical risks becoming higher. The North Korean missile crisis, if escalated, will have dire consequences for global financial markets.
Other key risks include international terrorism, the longer term impact of Brexit, large scale cyber-attacks, the adverse impact of a more inward-looking policies in the US and a slowdown in China.
Nearer to home, any sanctions on Myanmar over the Rohingya crisis could affect Asean unity and trade flows.
Ancient strategist Sun Tzu once said, “In the midst of chaos, there is also opportunity”.
As the world’s economy shifts east, companies are increasingly finding that their areas of competitive advantage represents more of a professional swimmer than a university professor – it lasts for a few years rather than a few decades.
Companies should capitalise on this opportunity to rethink their roles, strategy and their attitude towards risk as markets become more interconnected and competition for global talent becomes higher.
This is the new normal where no signs of easing are seen, at least in the near term.
Contributed by Dr. Yap Kwong Weng, Principal Advisor, Strategy and M&A, Managing Partner’s Office at KPMG in Singapore. The views expressed are those of the author.