Better Times Ahead
With economic conditions improving, Budget 2018 focuses on the future instead of the present.
The post-Budget seminar held on 2 March started off on a positive note.
“2017 was a good year, 2018 will be slightly slower, but it will still be good” said DBS Senior Economist, Irvin Seah during his insightful breakdown of Singapore’s economic prospects and the Budget at the event organised by the Singapore Chinese Chamber of Commerce & Industry (SCCCI).
Mr. Seah noted that GDP growth in 2017 was 3.6%, and while 2018 is expected to be slower, Singapore’s economy will still be in good shape as we benefit from a synchronised global recovery. He went on to identify the services industry as the main driver of growth, which will lift the labour market because services account for more than 60% of total employment in Singapore.
Mr Seah added that we will also see fairly good growth for the manufacturing industry at about 8%. He stressed that the manufacturing sector and the Singapore economy is dependent on export demand especially from China, accounting for about 15% of our total non-oil domestic export shares.
In line with the current economic climate, Mr. Seah said that the Budget announced on 19 February had struck the right note in balancing the present and future needs of the society; it addressed the short-term concerns of companies and at the same time, focused on long-term fiscal planning.
Mr. Seah also brought up a more sensitive topic on the recent GST hike and the need to ensure fiscal sustainability in Singapore. He highlighted that the government has been spending a lot on social expenditure to mitigate against the challenges of an ageing population. This has led to consecutive years of a primary deficit that will persist in 2018, and therefore the unavoidable GST hike.
“I know we have been talking about taxes and subsidies but there are ways beyond just simply hiking taxes and cutting subsidies… A more sustainable way is to grow the pie, to grow the economy.” said Mr. Seah while concluding his speech. This explains the importance of ensuring our local companies remain competitive through innovation which will ultimately increase our corporate tax revenue flows.
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