Singapore: Singapore’s trade-driven economy rose faster than thought in 2016 but concerns over a “lack of clarity” on US President Donald Trump’s policies could hit growth this year, the government said on Friday.
The economy expanded 2.0 percent in 2016, powered by a strong manufacturing sector performance in the fourth quarter, final data from the trade ministry showed.
The figures are an improvement on the 1.8 percent expansion recorded in an advance estimate released last month, with growth next year forecast between 1.0-3.0 percent.
But the ministry warned that rising protectionism in the West will hurt global growth while the results of upcoming elections in Europe could threaten the future of the eurozone at a time when Britain is on its way to exiting the European Union.
“If protectionist approaches become the norm, global trade will be adversely affected, with knock-on effects on economic growth worldwide,” the ministry said.
“Political risks and the lack of clarity on the policies of the new US administration have also heightened economic uncertainties globally and led to financial market volatility,” it added.
“These uncertainties may in turn weigh on business and consumer confidence, thereby dampening investments and consumption, and causing a pullback in global growth.”
Asia’s export-driven economies are increasingly concerned about growing anti-globalisation sentiment in the West, where globalisation and free-trade deals have been blamed for sending jobs abroad and opening the floodgates to immigrants.
New US president Trump last month pulled out of the Trans-Pacific Partnership (TPP), a major trade deal involving a dozen nations including Singapore that contains market-opening provisions that go well beyond cutting tariffs.
The island state is one of Asia’s wealthiest countries, but two thirds of its GDP is derived from external demand, making it vulnerable to developments outside the country.
Trump has vowed to pursue an “America first” policy, claiming that his country has been on the losing end of free-trade deals it had signed.
Trump has also said he will renegotiate other free-trade arrangements involving the US.