Year of the Dragon set to bring new hope for Singapore economy

Upturn in electronics cycle and end of global inflationary surge in sight, but recovery likely to be modest

- Ovais Subhani

With the end of the biggest global inflationary surge in decades and a turn in the electronics cycle in sight, Singapore's economy looks set to stage a comeback in 2024 the Year of the Dragon on the Chinese calendar.

But the much-anticipated export-driven recovery is likely to be modest, amid subdued demand from consumers in key markets such as the United States, European Union and China, where economic growth will remain subpar for most of the year.

"Not a fire-breathing dragon then," said Mr Frederic Neumann, chief Asia economist and co-head of global research at HSBC.

Indeed, new risks to the global supply chain are emerging, with shipping in the Red Sea having ground to a halt as violence linked to the Israel-Hamas war threatens to undermine the global economy.

Three container ships came under attack in the space of about a day late last week, prompting owners including MSC Mediterranean Shipping, A.P. Moller-Maersk and CMA CGM - the top three shippers in the world to announce plans to stay away.

Some ships from Europe to Asia are being rerouted around Southern Africa at higher freight rates instead of going through the Suez Canal, a critical maritime trade route in the Red Sea.

On Dec 19, global oil prices jumped after energy giant BP said it had stopped sending tankers through the Red Sea.

Still, Mr Neumann's allusion to the dragon had been written just days after the United States central bank gave its strongest signal yet of the possibility of bringing interest rates down from their four-decade highs - levels that have been crimping growth and consumer demand not only in the US but also worldwide.

It was a message of hope, or as he put it: "But altogether a dragon with more swagger." The latest developments bring hope but with a dose of caution.