1. At the beginning of 2017, there were concerns about rise of nationalism and nativism, underpinned by Trump’s political manifesto and battle cry to make America great again, and underlying forces driving Brexit.
Political victories by Merkel, Macron and other leaders show that the developed world is not ready to erect walls and build a more protectionist, defensive, and a more regulated economy.
Instead, it is committed to have a rule-based international order and to develop a progressive and hopefully, a compassionate globalized economy.
Regional blocs, such as the EU and ASEAN, will become more compelled to close ranks. There will be a stronger drive to complete regional agreements such as the CPTPP and RCEP in response to influence of stronger economies such as the U.S., China and other competitive blocs.
Notwithstanding the need for a more peaceful world, there will be increased military spending to strengthen geo-political influence and security, and combat extreme terrorism.
2. The U.S. will continue to look inward to resolve many of its domestic issues, and prepare for the midterm election due in November 2018. It will have a lesser influential role in global affairs.
The EU will continue to focus on enhancing its unity, coming to grips with Brexit, and maintaining its edge.
As a result, China and Russia will expand their circles of influence.
Russia will leverage on its influence online and in the Middle East.
China and India will be the fastest growing economies. They will have undue influence politically, economically and militarily.
China will continue to shift from a labor-intensive to a higher value-added service market; and from a “made in China” to a “created in China” economy. There will be a balance between being an investment-dependent economy and a consumption-based economy.
China has been offering candies and cookies, especially to gain support for its Belt and Road Initiative, and will continue to do so in order to strengthen its ties with many Asian and African countries.
3. Trump’s conflicting views and potential conflicts of interests – potential conflicts between him and the electoral base, and potential conflicts of views between him and members of his team and with members of the Senate and House of Representatives will cause greater unreliability, unpredictability and uncertainty.
This will underpin increased volatility in the economy and the investment market, resulting in knee-jerk reactions and sharp movements.
4. Trump’s projected expansionary policies will increase budget deficit, put upward pressures on inflationary rates, and increase interest rates.
In the short-term, we are already seeing – and will continue to see – flight of capital to the U.S. and strengthening of the greenbacks.
5. The global economy will grow modestly.
There’ll be increasing inflationary rates across the developed world, and central banks will be pressured to tighten monetary policies and introduce heterodox measures to tame undue inflation.
6. In Singapore, there will be a reshuffling of the cabinet in 2018.
By then, the possible candidates to become first among equal will be shortlisted to three candidates, namely, Chan Chun Sing, Ong Ye Kung and Heng Swee Keat.
The 4G leadership team will run key positions in the cabinet. They will be more active in crafting policies and directions for the nation.
As we move closer to the next General Election, there will be lesser price increase for public goods.
The ruling government will strengthen its socialist roots to improve social safety net for the poor and needy, including those who fall between the cracks.
There will be more resources being apportioned to re-skill our people for the new economy, especially the senior PMETs.
The government will look into more holistic ways to look after the elderly (in view of the forthcoming silver tsunami), children of disadvantaged families, retrenched and displaced workers, and those who are physically challenged.
In the short-term, the government will have to step up to improve total fertility rate as it will have a major impact on our economy and society in the future.
The ruling party will leverage on the 200th anniversary celebration of the founding of modern Singapore in 2019 to entrench its political position for the next General Election.
Singapore’s economy will expand by about 3-3.5 per cent. It will continue to go through a challenging time to redesign and re-make the economy.
SMEs will go through a tough time to have a stable and secure footing in the new world of disorder. There will likely be more belt-tightening measures in response to the VUCA environment.
Retrenchment and unemployment rate will increase in the short- to mid-term, especially among senior PMETs which will be on the rise.
The government will continue to introduce different measures in response to recommendations by the Committee on the Future Economy to improve capacity, develop new markets, help re-skill vulnerable workers, and to boost innovation and value-creating programmes.
A higher allocation of Budget 2018 should be deployed to strengthen the economy, support business growth and ensure that our workers are productive in the new economy.
7. Government’s land sales will deliver 7,400 units to the market. In addition, collective recent sales will add another 9,300 units; notwithstanding there’s a lag time of 1-2 years before they come on stream.
All these units will weigh on the current over-supplied market.
The current heat in the market is driven by pent-up demand, hype from the mass media, sentiments from the ground, biddings from overseas players, and need for developers to grow their land banks.
The rental market is still sluggish and the government has no urgent intention to remove the cooling measures. Political reality suggests that the ruling government is less inclined to want the market to become bullish, especially as we edge towards the next General Election.
While sentiments can drive up the market in the short-term, the reality of supply and demand factors will hit home in the mid- to long-term,.
There’s no need to rush into the property market in the belief that there will be a V-shaped turn in the near future.
The authorities will be watching the property market closely to ensure that it will not be overheated and more importantly, it will not affect the ruling party’s political currency.
The underlying intention is that the property market will grow in tandem with the projected growth of the economy. Having said that, the growth will not be broad-based and will only be applicable in selected areas that are underpinned by positive fundamentals.
8. The world is at an inflection point to herald the advent of a new age, supported by accelerated growth of advanced technology.
If Singapore plays our game well, we can be one of the fulcrums of a neo-Renaissance Age.
Singapore can be a vital toll gate for global trade.
We can be an essential hub and spoke, and the node, router and connector of international commerce.
How then should you respond?
Unpredictability is not an enemy. Uncertainty is not a foe.
Look out for silver linings in every dark cloud.
For example, threats to the economy and trade disputes will trigger knee-jerk responses and overreactions in the investment markets.
There’ll be under-valued assets that will yield positive gains for mid- to long-term investors.
For entrepreneurs, the economic slowdown is one of the best times to fine-tune business models, increase market shares, improve operations, and prepare for an upturn.
In a challenging environment, there’ll be increasing demand for bonds and asset-backed investments.
Singapore will become more appealing as a safe haven.
Many foreign investors, such as Chinese investors, may hedge value of their assets, arbitrage foreign currency movements, and invest in selected properties for mid- to long-term gains.
There will be good buys in both business and investment markets.
Here’s wishing you and your loved ones the most wonderful year and life ahead.
May all your dreams come true – beyond your wildest imagination.
I hope this message will find a place in your heart.
By the way, I have also recorded other reflections.
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