Singapore\u2019s Channel News Asia (CNA) has produced its own analysis of\nthe city-state\u2019s economy. Amidst positive headline figures, it reports\nthat not all Singaporeans are feeling the benefits.<\/p>\n
Singapore\u2019s gross domestic product (GDP) grew 5.7% year-on-year in\nthe second quarter of 2026. The economy is expected to reach 4.5% to\n5.5% growth this year. Non-oil domestic exports rose sharply while the\nartificial intelligence (AI) and technology sectors led growth. However,\nthe domestic sector recorded weaker performance.<\/p>\n
Sectors not linked to the global AI boom face pressure from\ngeopolitical risks and weakening consumer sentiment due to inflationary\npressures. This ultimately shows that Singapore\u2019s economy is uneven,\nwith the emergence of a \u2018K-shaped growth\u2019 pattern.<\/p>\n
K-shaped growth describes a condition when different parts of the\neconomy grow at different speeds or even move in opposite directions.\nSimply put, it means economic growth is not felt evenly across all\nsectors or groups in society.<\/p>\n
\u2018The growth seen in the headline numbers is indeed strong,\u2019 said\nMaybank Securities Singapore economist Brian Lee. \u2018But beneath that it\nis quite uneven.\u2019<\/p>\n
Domestic and consumer-facing sectors in Singapore are weak. The\nretail and food and beverage (F&B) sectors, for example, face high\nrental and labour costs. On the other hand, consumers remain cautious\nabout spending their money domestically. Some even prefer to spend their\nmoney abroad due to the strengthening Singapore dollar, which makes\ntravel and shopping in the region relatively more attractive.<\/p>\n
\u2018K-shaped growth is most visible in what Singapore\u2019s factories\nproduce and sell to overseas markets,\u2019 said ANZ Head of Asia Research\nKhoon Goh. \u2018This is most evident in Singapore\u2019s non-oil domestic\nexports, where electronic export growth has surged while non-electronic\nproducts have not experienced the same.\u2019<\/p>\n
In July, electronic non-oil domestic exports surged 112%\nyear-on-year. Meanwhile, non-electronic exports fell 2.3%.<\/p>\n
Goh added that nearly 60% of growth in the first half of this year\ncame from the manufacturing and logistics sectors. Meanwhile, the food\nand beverage sector contracted by 0.7%, while retail trade and\nnon-professional services recorded more moderate growth.<\/p>\n
Economists note that the best-performing sectors in recent quarters\nare not labour-intensive. Conversely, the sectors experiencing weakness\nemploy a large share of the workforce.<\/p>\n
Goh said the retail, hospitality, and non-financial services sectors\naccount for 24% of Singapore\u2019s economy. Unfortunately, these sectors\nemploy only about half of the total workforce.<\/p>\n
\u2018As a result, there is a feeling in society that strong GDP growth\nhas not benefited workers, especially with changes in the labour market\ndue to AI forcing companies to restructure to remain relevant,\u2019 he\nsaid.<\/p>\n
However, some other economists are cautious about applying the\n\u2018K-shaped growth\u2019 label to Singapore. They prefer to describe it as\n\u2018strong, but relatively narrow and uneven\u2019.<\/p>\n
Standard Chartered economists Edward Lee and Jonathan Koh, for\nexample, said in their report that households feel economic conditions\nmainly through job security, wages, and purchasing power, not through\noverall GDP figures.<\/p>\n
\u2018Strong GDP growth from the trade sector has not produced a\ncomparable increase in employment. This indicates that the external\nsector recovery has so far been relatively minimal in creating jobs,\u2019\nthey said.<\/p>\n
Singapore\u2019s Minister for Trade and Industry (Energy and Industry) Tan\nSee Leng said AI and automation allow companies to increase production\nwith fewer workers.<\/p>\n
\u2018Therefore, we can no longer assume that growth will automatically\ncreate the same number, type, or variety of jobs as before,\u2019 he\nsaid.<\/p>\n
Singapore\u2019s advantage, according to him, will depend on how adaptive\nthe country is. This includes proactive efforts to direct technology\nadoption and improve worker skills so they can fill new jobs as well as\njobs that have undergone changes.<\/p>\n
Meanwhile, Institute of Policy Studies senior research fellow Tab Ern\nSet said this condition must be addressed promptly. Uneven economic\ngrowth can create a \u2018dual economy\u2019.<\/p>\n
This means the economy can be divided into two segments. First,\nknowledge workers who benefit from technological advancement and\nincreased productivity. Second, lower-skilled workers who face weaker\nwage growth and the threat of job loss.<\/p>\n
\u2018These two segments are separated by a gap, with low opportunities\nfor mobility from the less advantaged group to the more advantaged\ngroup,\u2019 he said.<\/p>\n
In the long term, income differences can lead to wealth inequality.\nEspecially if the AI-supported segment continues to grow while the other\ngroup faces low wages or job losses.<\/p>\n
National University of Singapore Department of Communications and New\nMedia assistant professor Jun Yu said individuals and organisations with\nmore resources are generally in a better position to experiment with AI\nand turn it into productivity gains, influence, and income.<\/p>\n
\u2018Those with fewer resources may experience this transition as\nsomething imposed upon them,\u2019 he said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/whats-up-with-singapore-economic-growth-now-takes-a-k-shape-1787917885", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }