After rounding off the decade with the year from hell, Singapore’s traders are hoping the tentative truce in the US-China trade war may signal a better 12 months ahead. The export-dependent economy grew by just 0.7 per cent in 2019, while its shipments contracted by 9.2 per cent – both the worst figures since 2009 when the island state was pommelled by the global financial crisis. “While we hope for a better year in 2020, there are certain things we have to deal with – we're not sure how things will pan out between the US and China,” said Darric Teo, director at freight forwarding company ASL Solutions. “Things are very volatile, then recently there has been the problem with Iran. Oil prices will come into effect and I think for many manufacturing firms the demand is not there, and in logistics we pretty much depend on all these trade flows around the world.” While we hope for a better year in 2020, there are certain things we have to deal with – we're not sure how things will pan out between the US and China Darric Teo The last month of 2019 and the early weeks of January have, though, shown some signs of recovery. December’s non-oil exports were up 2.4 per cent on a year earlier, while industrial production – a gauge of manufacturing in Singapore – shrank by 0.7 per cent, data released by the Singapore government on Friday showed, much improved from minus 9.6 per cent in November. Nonetheless, those involved in and around Singapore Port are conscious of the volatility that lies ahead and the fragile nature of the phase one trade deal between China and the United States which stalled an escalation in tariffs between the world’s two largest economies. Singapore’s export to gross domestic product (GDP) ratio is higher than any other country except tiny Luxembourg. The biggest buyers of Singaporean goods, meanwhile, are Hong Kong and China – two economies which have also toiled over the past 12 months. Singapore is very dependent on the world economy. Any cough or sneeze in the world economy, we will feel the effect, no doubt about that Dylan Lee Hui Bin “Singapore is very dependent on the world economy. Any cough or sneeze in the world economy, we will feel the effect, no doubt about that,” said Dylan Lee Hui Bin, director of marine equipment exporter Ban Lee Machinery. “The Chinese and the Americans are the biggest consumers in the world, so last year the offshore and container shipping business was affected, because consumers were buying less. It means less budget for shipping companies to do their maintenance, which was not good for us.” Ban Lee Machinery suffered a drop in sales in 2019 and is expecting another shortfall this year. It has managed to stay afloat, however, while other, younger companies in the marine business have gone under, Lee said. More bankruptcies could be ahead, with analysts forecasting weak growth for 2020. The mood is discernibly more downbeat this time. With estimates showing that Singapore’s GDP grew by 0.7 per cent in 2019, the government now forecasts that the economy will grow only within the range of 0.5 to 2.5 per cent in 2020 Chua Hak Bin “The mood is discernibly more downbeat this time. With estimates showing that Singapore’s GDP grew by 0.7 per cent in 2019, the government now forecasts that the economy will grow only within the range of 0.5 to 2.5 per cent in 2020,” said Chua Hak Bin, an economist at Maybank. Erman Tan is the CEO of Asia Polyurethane Manufacturing, a producer of synthetic resins, plastics materials and non-vulcanisable elastomers – the sorts of chemical products that help make up Singapore’s second largest export category. When the US imposed tariffs on hundreds of billions of dollars worth of Chinese goods, Tan lost 20 per cent of his customer base, since they no longer needed the raw materials for their finished products. He was able to make up some of the gap by reaching out to old customers who were not trading between the US and China, and finding customers in new markets. Tan, though, admits the trade war has forced him to improve his manufacturing processes and invest in research and development to stay competitive, although remains under no illusions as to the challenges that lie ahead. “When I speak with manufacturing friends, they are a bit concerned even with the trade war deal. People are still super cautious, they think that this is episode number one, but there will be episode two or three still to come. So my friends in the manufacturing sector are still concerned, including myself,” said Tan. Accountants in the city state may take heart from the fact that the small rebound in exports in December was reflected in some other Asian exporting economies. Taiwan’s exports grew by 4 per cent, well ahead of analysts’ expectations. China also announced forecast busting export growth of 7.6 per cent, with the phase one deal with the US likely to boost trade further in 2020, even if most of that will benefit of American firms. A leading index by Japanese bank Nomura, which takes the pulse of 10 Asian exporting powerhouses three months ahead of the curve, is “signalling that Asia’s aggregate exports will rebound to positive year-on-year export growth this quarter”. However, the projection comes with a number of important caveats. “There is no shortage of risks that could cause the green shoots to wilt – from China’s coronavirus and US Democratic Party primaries to a setback in the US-China trade truce and a host of geopolitical hotspots,” said the bank on Thursday.