An Optimist’s Brief Predictions for 2017

by Patrick Liew on January 4, 2017

1. Nationalism and anti-economic globalization will continue to rise, with increased military spending to strengthen geo-political influence and security. Japan will increase its defence spendings and take on a more active role in the Asia Pacific region.

2. The European Union will continue to be pulled apart, with more divisions, polarizations and political upheavals. Elections in Germany, France and Italy will weaken glue that binds the EU.

3. As the US looks inward and takes on a lesser role in foreign affairs, coupled with the EU focusing on maintaining its edge, China and Russia will expand their circle of influence.

Russia will leverage its influence online and in the Middle East. China has started to offer candies and will continue to strengthen ties with its Asian neighbours.

4. The world is grappling with Trump’s conflicting views and conflicts of interest.

In addition, the potential conflicts between him and the electoral base, conflictp of views with and among members of his team, and conflict of views with members of the Senate and House of Representatives will inject a high degree of unpredictability and uncertainty.

This will underpin increased volatility in the economy and the investment market. It will dampen trade, increase volatility, reduce turnover, and cause sharp movements.

5. Trump’s proposed expansionary fiscal policies will increase budget deficit, put upward pressures on inflation rates, and increase interest rates.

We are already seeing and will continue to see flights of capital to the US and strengthening of the greenback in the near future.

6. There’ll be increasing inflation rates across the developed world, and central banks will further tighten monetary policies and introduce undogmatic policies to tame undue inflation.

7. In Singapore, the economy will continue to go through a cyclical downturn, with the economy expanding by about 1 to 1.5 percent. SMEs will go through a tough time trying to remain in the black without major cost cutting measures.

Retrenchment will increase and unemployment rate, especially among PMETs, will be on the rise.

The government will introduce measures in response to recommendations by the Committee of Future Economy to improve capacity, develop new markets, help re-skill vulnerable workers, and boost innovation and value-creating programmes.

A higher allocation of Budget 2017 will be deployed to strengthen the economy and support business growth.

How then should you respond?

Unpredictability is not an enemy. Uncertainty is not a foe.

Look out for silver linings in every dark cloud.

For example, threats to the economy and trade disputes will trigger knee-jerk responses and over reactions in the business and investment markets.

There’ll be distressed sales and under-valued assets that will yield positive gains for mid-to long-term investors.

For entrepreneurs, the economic slowdown is a good time to fine tune business models, increase market shares, improve operations, and prepare for an upturn.

In a challenging environment, there’ll be increasing demand for triple A-rated treasury bonds. Crude oil and commodity prices will recover modestly.

There are investment opportunities in industries that are less affected by cyclical downturns such as healthcare, education, energy, infrastructure, and pharmaceutical industries.

Also, when there’s a major knee-jerk reaction, it may be an opportune time to acquire blue-chip stocks with good fundamentals at basement prices.

As Singapore comes to grips with strong headwinds, investors can look at opportunities in the global markets, especially promising emerging markets such as India, Indonesia and Brazil.

Property prices in core central region have been declining and price gaps with the rest of the regions are narrowing. There’ll be increased demands for prime commercial properties with credible tenants.

There will be many other opportunities, possibilities, and good buys in both the business and investment markets.

The world is at an inflection point to herald the advent of a new age. An age that is supported by accelerated growth of advanced technology.

The challenges faced by Singapore are the same challenges faced by other developed economies.

As challenges mount, Singapore will become more appealing as a safe haven.

If there’s a country that has what it takes to overcome the challenges and rise to greater heights, the country is Singapore.

If Singapore plan and play our game well, we can be one of the fulcrums of a Neo-Renaissance Age.

We can become one of the most livable and lovable cities in the new world, a city fill with dream-chasers, value-multipliers, game-changers and world-beaters.

Here’s wishing you and your loved ones the most wonderful year and life ahead. May all your dreams come true – beyond your wildest imagination.


I hope this message will find a place in your heart.

By the way, I have also recorded other reflections.

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