Singapore is one of the most successful country in the world. The country has seen its GDP increase from more than $704 million in the 1960s to the current $323 billion. This has widely been described as the Singapore’s economic miracle that was engineered by the former leader, Lee Kuan Yew. Lee served as the prime minister from 1959 to 1990. As a result of the success, Singapore is often the Monaco of the East.
However, the Singaporean economy is going through a difficult patch. Data released recently from the country show that the economy is indeed weakening. In May, the country released the GDP data that showed Q1 economy grew by 1.2%, which was lower than the Q4’18 1.3%. In July, data from the statistics office showed that the GDP increased by an annualized rate of 0.1% in the second quarter. This was much lower than the growth of 1.1% that traders were expecting. It was also lower than the Q1 revised growth of 1.1%. The country now expects the economy to grow by between 1.5% and 2.5% this year. However, analysts expect this number to be downgraded.
Today, data from the country showed more weakness. In June, the non-oil exports declined by -17.93%. This was much lower than the -9.90% that traders were expecting. It was even worse than the -16.305 that was released in June. On a MoM basis, the non-oil exports declined by -7.60%, which was lower than the expected -3.90%. On a seasonal adjusted basis, the NODX reached S$12.9 billion in June, which was lower than the S$14 billion released in May.
On the other hand, the Non-Oil Retained Imports of Intermediate Goods (NORI) increased by S$0.6 billion from S$5.3 billion in the previous month to S$5.9 billion in June. This led to the trade surplus to narrow to S$2.4 billion.
In general, the total trade in Singapore decreased sharply in June. Total imports decreased by 4.8% in June while total exports decreased by 9.3%. On a seasonally-adjusted basis, the total trade decreased by 3.5% in June after growing by 3.5% in May.
It is these weaknesses in the country’s economy that caused the International Monetary Fund (IMF) to slash the growth forecast for the country. The organization expects the economy to grow by 2 per cent this year, down from the previous estimate of 2.3%. This slowdown is blamed on the trade tensions. Surprisingly, Singapore was expected to benefit as more companies move from China.
As a result of all this, the Singapore dollar has weakened significantly against the USD. The pair has risen to 1.3607, which is the highest level since July 11. On the chart below, the price is above the 14-day and 28-day moving averages while the RSI has moved to above the overbought level of 70. The pair will likely continue moving higher to test the 1.3630 level.