2018 is starting out a lot more optimistically than 2017 did.
A year ago, Singaporeans were fretting over the possibility of an economic slowdown amidst a spate of retrenchments.
But the year ended on a high note, with growth picking up in the second half of the year, making 2017 an unexpectedly good year for the economy.
So what can Singaporeans expect in 2018?
Slow and steady growth
Economic growth in 2018 is likely to be moderate, meaning it will be slower and steadier than it was last year. That means that while we can expect to enjoy consistent growth, we should not expect a repeat of the stellar figures we enjoyed last year.
The GDP is expected to grow at the rate of about 2.5% to 3%.
Of course, not all sectors will be enjoying the same rate of growth. While some sectors like manufacturing, electronics and semiconductors will be doing well, others like construction are expected to have a tough time.
In 2018, this uneven growth is expected to smooth out somewhat, but as always, it pays to remember that not all sectors will be growing at the same pace.
Better employment market, but salaries may not rise accordingly
2016 and 2017 were tough years for the job market, with lots of high profile retrenchments and poor workforce growth.
The good news is that the job market in 2018 looks set to improve. So those who are looking for jobs should have an easier time finding decent prospects.
The retrenchment rate is also expected to be lower, although PMETs should still be wary, as they’re likely to bear the brunt of any restructuring exercises.
However, hiring opportunities will not be even across all sectors. Promising sectors include fintech, education, IT and the public sector.
The sad news is that wages are unlikely to increase rapidly this year. For some, a job switch might be worthwhile in the face of an unsatisfactory annual increment.
Higher interest rates
Singaporeans should be prepared for higher interest rates in 2018. The central bank is likely to raise interest rates on the back of the economic recovery.
That means Singaporeans should be all the more prudent when budgeting for property purchases.
A potential oversupply of housing units due to 2017’s en bloc fever and poor rental returns could make property loans even more onerous for property investors. That being said, if you’re not sure what to do, the Mortgage Specialists at MoneySmart can easily provide you with advice if you are unsure about whether or not to refinance your home loan. Just head on over to MoneySmart’s Home Loan Wizard and you can get the information you need within minutes.
Stronger Singapore dollar
Singaporeans have been enjoying years of cheap travel thanks to the strong SGD.
Some analysts think the central bank should tighten monetary policy and strengthen the SGD in the face of rising overseas costs. Keeping the SGD strong would help to prevent domestic inflation from going through the roof.
Already, the SGD is the strongest it’s been against the USD in two years.
A stronger SGD would be good news for businesses that incur cross-border costs. It would also be good news for holidaymakers and those pursuing their studies abroad.
We’re all waiting with baited breath for this year’s Budget Statement to be announced on 19 Feb.
But given the hints the government has been dropping, we’re likely to see an increase in taxes.
While it has not been revealed in which areas we can expect taxes to rise, some commentators say that GST will be a prime candidate.
Other possible areas include overseas online purchases and increased sin taxes.
What are your financial predictions for 2018? Tell us in the comments!