Last week, Singapore reported some weak economic numbers raising fears of a recession. Annual exports fell for the eighth consecutive month while total employment expanded at a slower rate, retrenchments rose, and job vacancies shrank for the fourth straight quarter.
Based on data from Enterprise Singapore, a statutory board under Singapore's Ministry of Trade and Industry, non-oil domestic exports (NODX) declined 14.7 per cent in May. This is following a fall of 9.8 percent in April led by decreases in both electronics and non-electronics exports. The decrease is attributed mainly to weakness in the Hong Kong, Malaysia and Taiwan markets although exports to China and the United States ticked up. NODX to Singapore's top 10 markets declined as a whole last month.
The 14.7 per cent slump is far worse than the median 7.7 per cent decline that economists have predicted in a Bloomberg poll.
With Singapore's economy contracting 0.4 per cent on a quarter-on-quarter basis in the first quarter of this year, and global consumption slowing amid rapid rises in interest rates, the weak numbers heightened the risk of a technical recession in Singapore's export-oriented economy.
A technical recession is defined as two consecutive quarters of contractions.
Maybank economist Chua Hak Bin said to Reuters that the export downturn is deepening and shows "few signs of turning around", with the May data increasing the likelihood that Singapore may have slipped into a technical recession.
Separately, during the same week, Singapore's Ministry of Manpower (MOM) released its first quarter labour market report for 2023 which suggested a cooling job market as job vacancies dropped to 99,600 from 126,000 in the same period a year ago. Lay-offs also took place at a faster pace with 3,820 employees losing their jobs in the first quarter versus 2,990 in Q4-2022.
However, the total number of employed persons in Singapore grew for the sixth consecutive quarter by 33,000 in the January-to-March period, mainly driven by non-resident workers including Indians. A total of 30,200 of those employed came from overseas mainly to work in the construction and manufacturing sectors. This figure excludes migrant domestic workers who work in households.
With the additional hiring of overseas workers in Q1, a significant milestone was crossed as the number of non-resident employment crossed pre-pandemic levels for the first time. It is now 1.7 per cent higher than in 2019. Total employment in Singapore has surpassed pre-pandemic levels by 3.8 per cent.
The other 2,800 newly employed are Singapore citizens and permanent residents who were hired by companies in financial services, professional services, and health and social services.
Singapore has a significant Indian community living and working here.
As of June 2021, based on the Singapore Department of Statistics, Singapore has a population of 5.45 million. 4 million are citizens and permanent residents and out of which 7.5 per cent or 300,000 are ethnic Indians.
1.45 million of Singapore's population are considered non-residents, meaning they are either on various work passes or are students. Based on data published by the Ministry of External Affairs Consular Services, Indian nationals make up about 350,000 or 24 per cent of these non-residents in Singapore.
The proportion of Indian professionals in Singapore has doubled from 13 to 25 per cent between 2005 and 2020, according to Singapore's Minister of Manpower Tan See Leng in July 2021.
Indian talent is internationally portable and tends to look outward for opportunities. It is currently the largest country of origin for international migrants. In 2020, it accounted for 18 million international migrants, up by 2 million from 2015, based on United Nations Department of Economic and Social Affairs data.
The country has become the second largest source of immigrants in the US and the third largest in the UK, both of which are heavily invested in building tech capabilities.
Any contraction in the job market in Singapore will impact the trend of Indians arriving on its shores seeking job opportunities.
Singapore Ministry of Manpower said in April that "global economic headwinds have contributed towards a slowdown in Singapore's economy, which will weigh on labour demand going forward, particularly for outward-oriented sectors. Employment growth is likely to ease and be uneven across sectors."
OCBC Bank chief economist Selena Ling said to Singapore's Straits Times that "the softening labour market outlook is unsurprising given the deterioration in the external environment, including the United States' regional banking problems, China's stumbling recovery and the ongoing global semiconductor slump."
She added, "Recent business sentiments have also softened, as reflected in the manufacturing and electronics Purchasing Managers' Index (PMI) as well as our OCBC SME index. Hiring intentions and employment growth have begun to soften and may moderate in coming months since growth momentum is likely to slow in the second half of 2023."
"Interestingly, the rising vacancy and retrenchments for some industries like information and communication technologies and financial services suggest some ongoing churn and/or pockets of opportunities within the sector."
