Singaporeans are the most pessimistic about the economy in seven years as they’ve grown more gloomy about their quality of life, their income and job security.
Mastercard’s consumer confidence index for the city-state plunged to 33.6 in the first half of 2016, down from 44.3 for the previous six months, the company said in a statement on Aug. 11. It’s at the lowest level since June 2009, when the city’s gross domestic product contracted for four straight quarters.
“The drop in consumer confidence suggests that consumers will remain cautious ahead -- rightfully so,” Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, said. “The risk of external weakness spilling into domestic activity, if it materializes, will continue to be a drag on the labor market, muting both growth and inflation outlook.”
Singapore’s trade ministry on Aug. 11 lowered the top end of its 2016 growth forecast after the economy expanded less than previously estimated in the second quarter. Economists forecast Singapore’s economy to grow 1.8 percent this year, the slowest pace since 2009, when its economy contracted 0.6 percent, according to data compiled by Bloomberg. The consumer confidence index closely tracked the year-on-year GDP growth rate in the past two decades.
Singapore’s consumer confidence, which Mastercard said has shown a “significant deterioration,” compares with a reading of 32.1 for Hong Kong, the lowest since the second half of 2011 and the weakest score in Asia. The poor outlook on employment contributed most to the decline in Hong Kong’s reading, Mastercard said.
Between June and July, survey respondents were asked to give a six-month outlook on the economy, employment, regular income, the stock market and quality of life.
Singapore’s residential jobless rate rose to a five-year high of three percent in the second quarter, reflecting the subdued economic environment.