Singapore's economy is not doing so well - to say the least.
Singapore's GDP fell an annualized 4.6% in the three months through June from the previous quarter, and this came in weaker than the 1.5% contraction expected by analysts.
Our manufacturing sector fared the worst - shrinking an annualized 14% in Q2 compared to Q1. Construction declined 0.2%, while services contracted 2.6% in the same period.
This was the slowest growth rate since Q3 2012. Several banks, including UOB, Barclays and Citibank, already revised down forecasts for full-year GDP growth from 2-4% to 2-3%.
The grim economic outlook is set to have an impact on ordinary Singaporeans. We at GET.com share with you what aspect of your life is going to feel that impact.
1. The Value of Your Money Is Expected To Drop Against US Dollar
The Singapore dollar didn't fare well against the US dollar the day our GDP results were released. The USD/SGD climbed to 1.3631 and reached the highest level since mid-April this year. While the SGD is still stronger versus some other currencies such as the Malaysian Ringgit and the Euro, SGD is expected to weaken against the USD in the near to mid-term.
Basically, that means we need more money to buy the same US goods than before.
This is what will impact our lives directly:
We will pay a higher price for imported goods, especially from the US. Things from China will be more expensive too, because our currency against Chinese Yuan is also slipping. It's not a small thing, because US and China are our top trading partners. But look on the bright side - your shopping escapades to Malaysia or Europe will be cheaper!
2. It Can Be Difficult For You To Find Another Job In Manufacturing
Growth in all three sectors of our economy, including manufacturing, services and construction, declined over the previous quarter. This is the first time it has happened since Q3 of 2001.
Manufacturing growth in Singapore has been anaemic. On a quarter-on-quarter basis, the manufacturing sector contracted at an annualised rate of 14%, reversing the 0.4% expansion in the first quarter of 2015.
If you are still in manufacturing, it may be time for you to look into upgrading of your skills so that you will have ready skills for a transitioning economy.
Here's where the SkillsFuture Credit may come in handy.
Every Singapore Citizen 25 years old and above will receive an initial credit of $500 in 2016. You can use the $500 toward many work-skills related courses, and since many of them are already heavily subsidized by the government, the cost to you will be kept affordable. Plus, the government will make further top-ups to individuals' SkillsFuture Credit at regular intervals.
3. Will We See More Foreign Workers Again?
Our government tightened labour policy a few years ago and put a curb on the hiring of foreign workers. The inflow of foreign workers to Singapore has since been slowed. This ensured that more Singaporeans are employed.
In March 2015, Singapore's unemployment rate was only 1.8%.
With most Singaporeans already employed, companies couldn't hire people even if they were willing to. The labour crunch will hinder business growth, particularly in the service and manufacturing sector, which need more low-paying employees.
Without enough manpower, it's difficult for a company to expand operations and grow its business.
So is our government going to relax the labour policy and allow more foreign workers to come for employment?
For now, the government is remaining firm on this policy. In June, Manpower Minister Lim Swee Say said that there's "no U turn on foreign manpower policy".