Chinese Yuan. (Photo: AFP/VNA) Singapore’s economy may suffer from negative impacts from China’s move to devalue its currency for three consecutive days on August 11, 12 and 13, experts said.
Singapore’s stock market fell 4 percent after the event due to the sell-off of banking shares in the first two days of the week, which was said to be an overreaction. The market recovered on August 13.
However, if the uncertainties last too long, it will affect business and consumer confidence, leading to sluggish consumption and economic activities, according to experts. The broader economy then may be further hurt amid the slowdown in global trade, which will put Singapore at a disadvantage as the country is reforming its economy and recently lowered economic growth forecast for this year from 2-4 percent to only 2-2.5 percent.
The revision down of forecast is attributed to ongoing risks from an unstable external environment and the sluggish global trade alongside a cloudy outlook predicted for the coming months.
Song Seng Wun, an economist at CIMB Private Banking, stressed that for an export-dependent country like Singapore, there is definitely a downward pressure.
Francis Tan, an economist from the United Overseas Bank, pointed out that the semiconductor sector, which largely exports to China, is vulnerable following the yuan depreciation against the Singapore dollar.
The weakening yuan makes Singaporean commodities more expensive than China’s, reducing the country’s export competitiveness compared to other nations that are trading with China, Tan said, adding the tourism may also be affected, particularly in the number of Chinese visitors to Singapore.
The only sector that may potentially be insulated by the yuan movement is the construction industry, which is highly immune to external forces, Song noted.-VNA
