Speaker 1: It's a Singapore today top story with Lance and Daniel.
Speaker 1: It sure is. The Singapore PMI is a key barometer
Speaker 1: of the manufacturing sector in Singapore. Reading above 50 indicates
Speaker 1: that the factory activity is generally expanding and below 50%,
Speaker 1: it means that the activity is on the decline.
Speaker 2: OK, so what we're seeing is last month, our PMI
Speaker 2: edged down to 50.7%. That's the lowest in 7 months.
Speaker 2: The PMI for electronics, which accounts for about a third
Speaker 2: of Singapore's manufacturing activity,
Speaker 2: Declined to 51 from 51.1. Alvin news here, senior economist
Speaker 2: at U will be helping us break down these newly
Speaker 2: announced numbers. Alvin, welcome back. So that's, let's do the math, OK.
Speaker 2: That's a drop of something like 0.2 points from January's
Speaker 2: 50.9 points. Still, the readings above 50% generally indicate growth,
Speaker 2: but we're very close to 50. Um, so we're not
Speaker 2: in contraction territory technically speaking, but should we be concerned
Speaker 2: about the slight drop?
Speaker 1: Well, um, of course, you are right that we are
Speaker 1: still in expansion territory but it coming down. So suggest
Speaker 1: somewhat of a easing momentum and we should be looking
Speaker 1: out for that, especially if you mark it against the
Speaker 1: region itself, right? The region also had the PMI numbers
Speaker 1: coming out.
Speaker 1: Ah, yes, uh, just yesterday I believe most of them
Speaker 1: were on the uptrend so that we are slightly on the, the,
Speaker 1: the other side of the equation that we are coming,
Speaker 1: the numbers are easing.
Speaker 1: Alvin Electronics, a big player for Singapore. It accounts for
Speaker 1: about a third of our manufacturing cluster. It had a
Speaker 1: slight dip to 51 points last month from January's 51.1 points.
Speaker 1: So are we still riding that AI wave?
Speaker 1: I think ah I'm not quite sure whether it was
Speaker 1: this program we talked about we did talk about this
Speaker 1: because um of course we know that we don't produce
Speaker 1: the AI chips. That's ah quite clear. Those are the
Speaker 1: productions are elsewhere.
Speaker 1: But ah what we do have is the related functions
Speaker 1: related productions, like, I mean the AI chips we don't produce,
Speaker 1: but those chips need memory, right, and the memory chips, right.
Speaker 1: So the memory chips that are going goes along with that, right,
Speaker 1: is produced by um some of the companies, some of
Speaker 1: the semiconductor companies here. So that's how we are part
Speaker 1: of that wave itself. um to say that we are
Speaker 1: not ah that I believe that the wave is still on.
Speaker 1: But, um, of course, ah there are other variables that
Speaker 1: ah we should ah be also mindful of. Of course,
Speaker 1: there's policy uncertainty that trade, trade developments, especially of the
Speaker 1: news that you you probably have just reported. Those things
Speaker 1: will still be kept in focus and probably some extent
Speaker 1: the uncertainty itself may have kept some parts of manufacturing
Speaker 1: may not be related to AI, but some other parts
Speaker 1: of the manufacturing.
Speaker 1: A bit on the cautious footing.
Speaker 2: I want to understand a little bit more about the
Speaker 2: impact of overcapacity and front loading because of all these
Speaker 2: uncertainties that we're reading about on a daily basis, especially
Speaker 2: for products entering the US starting really to have some
Speaker 2: impact for us. We're feeling the bite.
Speaker 1: Um, unless this is really a forward looking, very, very
Speaker 1: forward looking number, because like the numbers, the the the
Speaker 1: additional tariffs that was literally just announced like less than
Speaker 1: 12 hours ago, but this survey is probably covered slightly
Speaker 1: earlier than that. But ah I mean that's true that
Speaker 1: um
Speaker 1: The we have seen, if we, I think well our
Speaker 1: economists have reported that we have seen the peak in
Speaker 1: the electronic cycle somewhere, maybe in the middle of the
Speaker 1: second half of last year, somewhere there and in the
Speaker 1: in the bellwether economies in terms of electronics like uh
Speaker 1: Taiwan and South Korea, it has eased and we thought
Speaker 1: that that would have represented the peak of the cycle
Speaker 1: and it's coming down, um.
Speaker 1: But I guess again this um the trade policies that
Speaker 1: have been announced, everything, these are real and the of
Speaker 1: course the continuous fear is there might be, there will
Speaker 1: be more that is to be announced and that would
Speaker 1: actually have a more serious bearing on how the global
Speaker 1: trade environment would turn out to be in the coming
Speaker 1: to the
Speaker 1: Uh, later half of 2025 itself. OK, Alvin, let's talk
Speaker 1: about these protectionist policies. We know, like you just said,
Speaker 1: 12 hours ago, US President Donald Trump said that tariffs
Speaker 1: on Chinese imports and levies on Mexico and Canada will
Speaker 1: go ahead. Some people say, you know, you close one door,
Speaker 1: you end up with maybe another door opening. So will
Speaker 1: that impact us in more negative way or perhaps there's
Speaker 1: some positivity.
Speaker 1: That could come out, come out of this, you know.
Speaker 1: So maybe a mixture of both, or maybe, how can
Speaker 1: we make good on the situation too?
Speaker 1: I think we can take the episode of 2018 as
Speaker 1: an example. So that was a pretty much a straight
Speaker 1: up between US China trade tensions, and with that itself,
Speaker 1: we have seen that the trade or the investments have
Speaker 1: gone to some parts of, especially like in parts of Asia.
Speaker 1: ASEAN and some of the economies have benefited from the
Speaker 1: trade diversion itself and but this time around, this has
Speaker 1: been a more the the trade fight is not.
Speaker 1: Just going to be between US and China, as you
Speaker 1: have seen, it now also involve the allies of Canada
Speaker 1: and Mexico, although they are for different reasons. Fentanyl was
Speaker 1: the basis of the for the the the the imposition
Speaker 1: of those tariffs on Canada and Mexico primarily, but on
Speaker 1: coming through to the 2nd of April where they are
Speaker 1: looking at
Speaker 1: The rest of the world in terms of that, um,
Speaker 1: I think if you look at the countries or economies
Speaker 1: that have a significant trade runs a significant trade surplus
Speaker 1: against the US, right, those countries might be in a
Speaker 1: higher risk of tariffs being slap on their respective economies
Speaker 1: like what we are seeing right now and with that itself.
Speaker 1: Um, then while Singapore may not be directly impacted because
Speaker 1: we run a trade deficit with the US, US exports
Speaker 1: more to us than we export to US, but we
Speaker 1: are a global and trade dependent economy and with anything
Speaker 1: happening to the global trade system itself, right, then we
Speaker 1: will be negatively impacted.
Speaker 2: Mm.
Speaker 2: Looks like you're gonna be tuned into CNA93 for the
Speaker 2: latest updates on all of this regularly.
Speaker 1: I think you have to do it 24/7.
Speaker 2: I think so too. Let, let's build on, OK, let's
Speaker 2: change that, let's change that. Let's start talking about China.
Speaker 2: China's going to hold its two sessions meeting from tomorrow,
Speaker 2: and many are hoping for some kind of huge stimulus
Speaker 2: package at this key parliamentary meeting. They want to see
Speaker 2: stimulation for the economy and trying to maintain that 5%
Speaker 2: growth target for this year as well.
Speaker 2: If little is promised.
Speaker 2: Would that or how would that affect Singapore's top trading partner?
Speaker 1: Well, OK, to be fair, I think policy, our, our
Speaker 1: economists covering China thinks that policy support will be stepped
Speaker 1: up in 2025.
Speaker 1: That's it, I don't think we are expecting a significant
Speaker 1: expansion of stimulus, and I think we are not likely
Speaker 1: to see any major policy surprises being sprung on at
Speaker 1: this latest NPC itself. What we do see is that
Speaker 1: China is expected to have some keeping the emphasis on
Speaker 1: boosting consumer demand, consumer spending.
Speaker 1: Promotion of the private sector, technological innovation to lead the
Speaker 1: development of new productive forces, much like the AI, the
Speaker 1: deep sick as an example and to boost supply chain resilience.
Speaker 1: We are not expecting to see what took place in
Speaker 1: perhaps like 20 2008 whereby there was this huge fiscal
Speaker 1: stimulus that was pushed into the system that is not
Speaker 1: something that I think we are expecting.
Speaker 1: If you look at the EU, you know, it's, it's
Speaker 1: got a good relation.
Speaker 1: Ship with Singapore when it comes to trade and bilateral ties.
Speaker 1: Do you see them pivoting even more towards Asia, wanting
Speaker 1: to trade more towards Asia because they're seeing these issues
Speaker 1: right now with the USA? Could that be of benefit
Speaker 1: to us in a big way? They trade with us,
Speaker 1: we trade with them, and it's win-win for the two sides.
Speaker 1: Definitely in this current environment, you would like to look
Speaker 1: at markets that you can diversify your markets and if
Speaker 1: you want to diversify into markets, you want to be
Speaker 1: diversing your markets first with growth potential and perhaps also
Speaker 1: emerging middle class whereby the purchasing power is
Speaker 1: Ah, has been relatively set up, say, versus like maybe
Speaker 1: 1020 years ago. Then in many sorts of those based
Speaker 1: on those criteria, then I think ASEAN will fit the
Speaker 1: bill for ah for the EU to increase our our
Speaker 1: ties and relationships, but at the end of the day,
Speaker 1: if you're talking about replacing
Speaker 1: One growth, the one the demand from one economy as
Speaker 1: big as US right that is really a tall order
Speaker 1: even for ASEAN to fill up. So it is difficult,
Speaker 1: but it's to, I would think that the divers diversification
Speaker 1: the principles would still work, especially like this region we
Speaker 1: are seeing that.
Speaker 1: Uh, the growth, the economic growth in this region itself,
Speaker 1: the growing middle income itself, uh, of the middle income
Speaker 1: segment itself, those are really positive factors that actually will
Speaker 1: promote that kind of trade, uh, for the EU with
Speaker 1: this region, but like again, I mean we can be
Speaker 1: part of the diversification process, but we cannot fully replace
Speaker 1: what is the biggest market for them.
Speaker 2: It seems like we're gonna have to do a lot
Speaker 2: with foreign direct investment flows. How do you think Singapore
Speaker 2: is placed when it comes to that?
Speaker 1: Um, definitely we are, I think we are very positively
Speaker 1: placed for this, but of course, we are, uh, uh,
Speaker 1: I would say that we are a very developed, a
Speaker 1: very mature economy, but then we still see a lot
Speaker 1: more inflows coming here, but those inflows will be, we
Speaker 1: serve as a good center for them to see the
Speaker 1: distribution towards the rest of the economies around the region,
Speaker 1: which actually actually benefits everyone.
Speaker 1: And uh of course, what we see is continue like
Speaker 1: there will still be a lot of uh uh high
Speaker 1: value activities that come here that will stay here, including
Speaker 1: um like I think the regional treasury centers and um
Speaker 1: I think the regional HQs here.
Speaker 1: But uh I think some of the production whereby some
Speaker 1: of these companies are looking for it would still need
Speaker 1: to go for uh places where there will be um
Speaker 1: relatively comparatively cheaper production costs itself. So I think that's
Speaker 1: understandable and I think that kind of flow in terms
Speaker 1: of where the foreign direct investments would would still continue
Speaker 1: and especially in an environment where there's such
Speaker 1: Trade, uh, tensions and developments still ongoing, right? I think
Speaker 1: it it really is quite a strong factor as well
Speaker 1: to see the continued flows of FDI coming into this region.
Speaker 1: Do you think because we know US President Donald Trump
Speaker 1: wants to see a lot of manufacturing returned to the USA.
Speaker 1: He's even said he's gonna put money in to compete
Speaker 1: against Taiwan because we know Taiwan does a lot of
Speaker 1: these semiconductors. So we know America has got huge investments
Speaker 1: here in Singapore. It's more than the investments in China, India,
Speaker 1: South Korea, and Japan. Do we see that as being
Speaker 1: a problem as well? Because if he wants manufacturing to
Speaker 1: return to the US, some of these big companies, could
Speaker 1: they relocate and leave us?
Speaker 1: I think ah what you're referencing to perhaps was the
Speaker 1: the 100 billion that is ah um.
Speaker 1: I, I guess pledge for the investments into ah for
Speaker 1: semiconductors ah from Taiwan into into US. Yeah, that's why
Speaker 1: even today we saw huge drops in some of these
Speaker 1: big firms like TSMC and Nvidia too.
Speaker 1: Yeah, but I'm not quite sure whether the the reasons
Speaker 1: is also is just plainly on that, but of course, um,
Speaker 1: I think we will continue to, I think like building
Speaker 1: on the previous question on the FDI flows, we will
Speaker 1: still see foreign direct investments coming into this region and
Speaker 1: Singapore will definitely be still one of the beneficiaries. The
Speaker 1: problems of that itself, I again, um, they
Speaker 1: I somehow, some it really we are a very diversified, uh,
Speaker 1: we have a very diversified manufacturing base, even though I
Speaker 1: think when we look at it, we have I think
Speaker 1: great strengths in the electronics, but we also have other
Speaker 1: sorts of production which need not necessarily be just ah
Speaker 1: catering to um and the the the interesting point is
Speaker 1: again if we point to the
Speaker 1: Ah, what I made comment earlier, right, is that we
Speaker 1: still run a trade.
Speaker 1: Ah, against the US, so is that still means that
Speaker 1: whatever that we are producing here, right, and we produce
Speaker 1: quite a fair bit of things here, right, they are
Speaker 1: going to a lot of other centers where they are
Speaker 1: served as intermediate goods or final goods itself, ah but
Speaker 1: more more likely to be for further production elsewhere and
Speaker 1: the direct ah the direct chain towards like the US
Speaker 1: itself is not so is.
Speaker 1: As the numbers suggests, it's not as ah.
Speaker 1: or the, the, the, I would say that in as
Speaker 1: a consequence, we don't run that surplus.
Speaker 1: Against the US versus like many of these economies that
Speaker 1: we have mentioned before, such as ah Taiwan in terms
Speaker 1: of their electronics, yeah.
Speaker 2: Alvin, I've just got about a minute left. Give us
Speaker 2: your hot take on how Singapore is forecast a modest
Speaker 2: 1 to 3% growth for 2025, which is down from
Speaker 2: the 4.4% GDP growth last year. What's your hot take
Speaker 2: in terms of our GDP outlook?
Speaker 1: OK, I think there's a reasonable outlook from the official
Speaker 1: guide official sources, given that we are going to a
Speaker 1: year that things are a bit more uncertain and as
Speaker 1: the news flow continues, it will likely to look look
Speaker 1: so we have a slight, ah we are slightly on
Speaker 1: the upper band of the the the the forecast range
Speaker 1: we are looking at 2.5%.
Speaker 1: But also clearly that if we were to talk about
Speaker 1: the risk, the risk is on the downside for now
Speaker 1: given the trade developments, but um I think um if
Speaker 1: you look at where building on the budget itself that
Speaker 1: just was announced just a few weeks ago, right, I
Speaker 1: think we see that there is a healthy surplus from
Speaker 1: the government and they, well they have distributed a lot
Speaker 1: of positive.
Speaker 1: Ah, measures in the in the in the current 2015 budget,
Speaker 1: they also have kept a fair amount of ammunition behind.
Speaker 1: So if things do turn, let's say, a more negative
Speaker 1: in the second half, right, we could see them having
Speaker 1: the ammunition left to come up with something a supplementary
Speaker 1: budget to help the economy over that uncertain period.
Speaker 2: Alvin Liu, thank you so much for your time, senior
Speaker 2: economist said you will be joining us for a Singapore
Speaker 2: today top story.