Philippine Economy

Economic

Summary:

The Philippines’ economy is recognised as one of the most dynamic in the East Asia Pacific region, driven by solid economic fundamentals and a competitive workforce.

Between 2010 and 2019, the country’s average annual gross domestic product (GDP) growth was a robust 6.4%.

The pandemic, however, significantly disrupted this growth trajectory, with the economy contracting by a record 9.6% in 2020. Prolonged lockdowns to contain Covid-19 resulted in sharp declines in consumption, investment, exports, tourism, and remittances.

The recovery was swift, with the economy expanding by 5.7% in 2021 and accelerating to 7.6% in 2022, surpassing pre-pandemic levels. In 2023, GDP growth moderated to 5.6%, reflecting a normalisation of economic activity. The IMF projects continued resilience, forecasting growth of 5.8% for 2024 and 6.1% for 2025. Philippine Economy_1

The Philippines’ population currently stands at approximately 114.3 million, with a median age of 25.7 years (2024), highlighting a young and vibrant workforce.

The Philippines’ unemployment rate showed a general decline throughout 2024, indicating improvements in the labour market. It stood at 3.6% in November.

Currency and Central Bank

The Philippine peso (PHP), locally known as piso in Filipino, is the country’s official currency. It is subdivided into 100 centavos or sentimos. Before 1967, Philippine money featured the English term peso; this was changed to the Filipino language as part of cultural and linguistic reforms.

The Bangko Sentral ng Pilipinas (BSP), serves as the country’s central bank. The BSP was established in 1993 in accordance with Republic Act 7653 or the New Central Bank Act of 1993. This was later amended under Republic Act 11211 or the New Central Bank Act of 2019.

In 2024, the

Philippines achieved an average inflation rate

of 3.2%, aligning with the Bangko Sentral ng Pilipinas (BSP)’s target range of 2% to 4%. This marks a significant improvement from the 6.0% average inflation rate recorded in 2023.

Industry and Trade

Services, industry, and agriculture are the main sectors of the Philippine economy.

The services sector is the largest contributor to the country’s GDP, accounting for approximately 62% of the total output. Significant growth was observed in telecommunications, business process outsourcing (BPO), and finance. The BPO industry, in particular, continued to thrive due to the country’s high English proficiency, educated workforce, and cost advantages.

The industry sector contributes around 28% to the GDP. Key manufacturing activities included food processing, cement, glass, chemical production, and iron and steel manufacturing. The Value of Production Index (VaPI) for manufacturing showed a year-on-year increase of 5.9% in April 2024, indicating a rebound in industrial output.

Lastly, the agricultural sector’s contribution to the GDP has continued to decline in recent years and is currently at about 9%. However, it still provides employment for almost 24% of the labour force. Major agricultural products included coconut, sugar, and rice. The sector faced challenges such as weather disturbances and fluctuating commodity prices, impacting overall productivity.

The Philippines aim to boost exports and strengthen the country’s economic standing on the global stage. Key export products including integrated circuits, office machine parts, insulated wire, semiconductor devices, and electrical transformers. A partnership by the Department of Trade and Industry (DTI) and the Department of Agriculture (DA) aims to unlock the full potential of the agriculture and fisheries sector, actively promoting Philippine products in international markets.

The top export partners of the country are China, the United States, Japan, Hong Kong, and Singapore. On the import side, China, Japan, South Korea, the United States, and Singapore are the biggest trading partners. Major imports comprise integrated circuits, refined petroleum, cars, crude petroleum, and broadcasting equipment.

Stock Exchanges and Capital Markets

The Philippine Stock Exchange was established through the merger of the Manila Stock Exchange and the Makati Stock Exchange in 1992, is the country’s sole stock exchange and one of the oldest in Asia, with origins dating back to 1927.

The PSE Composite Index or PSEi is the main index of the Philippines. It comprises 30 of the largest and most active stocks listed on the exchange, selected based on criteria such as public float, liquidity, and market capitalization.

The PSE has a total market capitalisation of $344.875 bn in December 2024. Exchange-Traded Funds (ETFs) are offered via the First Metro Philippine Equity Exchange Traded Fund, Inc.

Bond Market

The Philippine domestic bond market comprises both short- and long-term instruments, predominantly issued by the national government, with treasury notes and bonds leading the market. While the corporate bond segment remains smaller in comparison, it has experienced significant growth over the years.

In the third quarter of 2024, the local currency bond market expanded by 3.8% quarter-on-quarter, reaching a total of PHP 13 trillion. This acceleration was driven by increased issuances across all bond segments, supported by the Bangko Sentral ng Pilipinas’ (BSP) dovish monetary policy stance.

In May 2024, the Philippines returned to the international capital markets, successfully issuing $2 bn in dual-tranche 10-year and 25-year dollar-denominated global bonds. The 25-year tranche was issued under the Republic’s Sustainable Finance Framework, marking the country’s fifth G3 ESG bond offering.

Building on the success of its maiden $1 bn 5.5-year Sukuk bond issued in December 2023, the Philippine government plans to issue another Sukuk bond in 2025. This initiative aims to develop the Islamic finance market and attract Shariah-compliant investments, reflecting the country’s commitment to diversifying its investor base and financial instruments.

Real Estate Market

The Philippine real estate market has experienced significant fluctuations over the past decade, influenced by various economic and global factors.

Between 2010 and 2018, the market saw substantial growth, driven by economic expansion and a burgeoning middle class. However, challenges such as the US-China trade tensions and the Covid-19 pandemic led to a slowdown in 2019 and 2020. By the end of 2020, the Philippines was among the worst-performing markets in the Global Residential Real Estate report.

Recovery commenced in 2022, with the average price of luxury 3-bedroom condominiums in Metro Manila’s central business districts rising by 3.98% to PHP 203,550 (US$3,571) per square meter, according to Colliers International.

In 2024, the market continued its rebound, supported by the government’s projected GDP growth of 6% to 7%. However, sustained high inflation rates posed potential challenges, particularly concerning interest and mortgage rates.

Source：asia fund managers

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Risk Warnings and Disclaimers

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Winkelmann

Cryptocurrency

Bitcoin hodlers continuing to accumulate during price declines, along with short-term holders buying more during price surges driven by FOMO (fear of missing out), sets a “bullish tone” for 2025, according to a crypto analyst.

Long-term Bitcoin (BTC) hodlers (LTH) — those who have held their Bitcoin for more than 155 days — dominance “remains high, signaling strong long-term conviction,” CryptoQuant contributor IT Tech said in a Jan. 24 analyst note. He said:

“They continue to accumulate during price declines and strategically take profits during upward trends.”

Short-term holder behavior is setting a ‘bullish tone’ for 2025

Meanwhile, IT Tech said that Bitcoin short-term holders — those who have held their Bitcoin for less than 155 days — seem more confident about buying into the market’s upside momentum, making him more optimistic about Bitcoin’s price over the next 12 months.

Bitcoin Short-term Holders 'Fomo-Driven Entries' Sets Bullish Outlook_1

Bitcoin is trading at $104,390 at the time of publication. Source: CoinMarketCap

He said that short-term holders jumping in most when Bitcoin’s price is on the rise signals they’re “FOMO-driven entries.”

“Short-term holders acting on speculation, sets a bullish tone for 2025,” he said.

Throughout January, Bitcoin has hovered around the psychological $100,000 price level, dipping below it a few times while briefly reaching a new all-time high above $109,000 on Jan. 20, just ahead of Donald Trump’s inauguration as US president.

At the time of publication, the average long-term holder's cost is $24,639 per Bitcoin, which represents the average hodler is in profit of more than four times that amount, as per Bitbo data.

Bitcoin’s current price is $104,390, as per CoinMarketCap data.

Bitcoin Short-term Holders 'Fomo-Driven Entries' Sets Bullish Outlook_2

Bitcoin long-term realized price is $24,639 at the time of publication. Source: Bitbo

The short-term realized price is $90,541. Data from Checkonchain, a Bitcoin onchain analysis program, indicated that 80% of short-term holders were back in the profit bracket after BTC’s recovery above $100,000. Earlier this month, the STH supply in loss dropped to 65% before Bitcoin rebounded.

LTH profit-taking creates accumulation opportunities

Meanwhile, IT Tech explained that occasional sell-offs by long-term holders shouldn’t be a cause for concern, as they can “create healthy pullbacks, offering opportunities for new accumulation,” he said.

According to a separate Jan. 24 analysis by CryptoQuant contributor “Crazzyblockk,” long-term holders are “largely avoiding significant selling, reinforcing a strong HODLing sentiment despite current market fluctuations.”

The analyst said that recent on-chain data revealed that only 18% of Bitcoin deposits into crypto exchange Binance come from long-term holders.

Source: COINTELEGRAPH

Risk Warnings and Disclaimers

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Thomas

Cryptocurrency

Just four days after his inauguration, US President Donald Trump is starting to make good on his promises to the crypto market.

After heading into office with a brazen husband-and-wife double act ‘memecoin’ issuance, there was little doubt that Trump would fervently back the crypto market. He followed through on that signal, with an executive order entitled ‘Strengthening American Leadership in Digital Financial Technology’ on Thursday.

As is the case with most executive orders, it is light on firm policy detail. However, it does make a number of important promises.

First, it promises to promote access to public blockchain networks. At present, many institutions, particularly banks, find it difficult to interact with public blockchains because their open nature make them hard to draw regulatory perimeters around. When anyone can participate in a network, know-your-customer checks becomes all but impossible to enforce.

This, combined with the Securities and Exchange Commission’s withdrawal of its controversial Staff Accounting Bulletin 121 (which made crypto a distinct asset class, requiring banks to treat cryptoassets held in custody as a liability and hold an asset against them) opens the door for traditional financial institutions to begin offering crypto services to their clients.

The SEC has also established a crypto taskforce, headed by the well-respected commissioner Hester Peirce. The Commodities and Futures Trading Commission has yet to establish its own cryptoasset regulatory body despite the fact that key legislation presently in Congress would place crypto markets under the CFTC’s supervision.

The convergence of cryptoassets and traditional finance – though contrary to crypto purists’ anti-bank ethos – is likely to provide the boost to crypto-markets that many predicted following Trump’s election victory in 2024.

Second, Trump’s executive order highlights ‘protecting and promoting fair and open access to banking services’, which is a veiled allusion to ending the practice of crypto debanking. Many in the crypto industry have found it difficult to secure banking relationships with reputable US institutions, typically due to banks’ risk management frameworks. How exactly the Trump administration intends to see these rewritten remains to be seen, but it is safe to assume that crypto and traditional banking’s relationship will grow closer.

Third, the executive order hammers a final nail into the coffin of a US central bank digital currency, citing concerns that it would ‘threaten the stability of the financial system’. This assertion has mostly been discarded by the central banks of the rest of the world, whether or not they intend to issue CBDCs. It is mostly asserted by banks that perceive themselves as at risk from disruption by CBDCs.

A likely future for CBDCs and stablecoins

It is also interesting to note that the executive order’s definition of CBDC (‘a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank’) is so broad as to include not only retail and wholesale CBDCs, but also FedWire, the Federal Reserve System’s own wholesale payments service.

While this seems to preclude wholesale CBDC, the Fed may find a way to proceed with finding a means of representing central bank money digitally for use in financial markets or for interoperation with foreign central banks to improve cross-border payments. Such projects may find it beneficial to rid the label of ‘CBDC’ to ensure they are palatable to US authorities, but the legislative efforts so far (the CBDC Anti-Surveillance State Act) are primarily focused on retail CBDCs.

On the other hand, the executive order’s mention of stablecoins as a means of promoting and protecting the dollar’s sovereignty might suggest that the new administration will back private sector efforts to ensure that tokenised cash settlement and cross-border payments is carried out by stablecoins.

If so, that could result in a major divergence in the US from international efforts to bring central bank money onto unified ledgers. This risks seriously devaluing these projects since the dollar holds such an enormously important role in financial markets. For the Bank for International Settlements’ Project Agorá and its ilk to proceed without the dollar would lessen their value. It would also require a major pivot in their design principles to incorporate stablecoins instead of US central bank money.

What Trump 2.0 means for crypto

Trump’s pro-crypto stance will be divisive. Even among fans of the asset class, the issuance of the Trump memecoin (while retaining 80% of the supply) has drawn criticism as a brazen cash grab typifying the worst form of profiteering opportunism that has given the industry a bad name.

The executive order also revives Trump’s campaign promise of a ‘strategic bitcoin reserve’, the main purpose of which appears to be the enrichment of bitcoin holders.

But the removal of the obstructive approach that characterised Joe Biden’s administration (not to mention the much-criticised former SEC chair Gary Gensler’s ‘regulation by enforcement’ attitude to crypto rule-making) creates an environment where cryptoassets and the businesses that serve them can thrive in the US. The EU enjoyed a brief period of relative appeal thanks to the clarity of its Markets in Crypto-Assets Regulation, but the US, already home to the lion’s share of the industry’s talent, is ready to kick into gear.

Source:Lewis McLellan

Risk Warnings and Disclaimers

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Justin

Forex

Economic

According to some forecasts, the dollar will surrender 10% of its share of global foreign exchange reserves over the next 10 years. If that happens, 10 different currencies will benefit.

The latest Currency Composition of Official Foreign Exchange Reserve data from the International Monetary Fund show that the dollar’s share of global foreign exchange reserves fell to 57.4% in Q3 2024 (Figure 1). This is the smallest share since 1994 and represents a decline of almost nine percentage points during the last decade.

The key driver of this move has been a reaction to the increased weaponisation of the dollar. This has always been an aspect of its ‘exorbitant privilege’ but has grown in importance since the 11 September 2001 terror attacks and reached a peak in 2022 after the Russian invasion of Ukraine.

Figure 1. Dollar’s share of global reserves fell by 9pp over last decade

Dollar’s share of global reserve currencies, %

Which Currencies Will Benefit From Dollar Erosion?_1

Source: IMF COFER

Weaponisation will also be a factor behind the next 10% decline in the dollar share. The US is in the enviable position of being able to use financial assets to achieve foreign policy, or sometimes military objectives, without deploying soldiers. Hence, national security goals can be achieved relatively cheaply.

However, as early as 2017, then US Treasury Secretary Jack Lew acknowledged that the use of this weapon will push some players to avoid the dollar in the future, thereby reducing the extent of dollar dominance.

Academics have been successful in forecasting the gradual decline in dollar dominance since the year 2000 but have been hopeless at forecasting which currencies would benefit. Many have been in search of a single winner, when the reality has been that a wide array of currencies have benefitted. This pattern will continue.

The top 10 countdown

It is the small currencies that have taken up most of the slack in the last decade. Some of these, such as the Japanese yen, UK sterling, Australian dollar, Canadian dollar and Swiss franc, are named in the IMF COFER report. All five of them will grow as the US dollar’s share declines.

Figure 2. Smaller currencies have profited from dollar’s smaller share

Major reserve currency shares except dollar and euro, %

Which Currencies Will Benefit From Dollar Erosion?_2

Source: IMF COFER

The category that may continue to do best is described in the IMF data as ‘other’. These are non-traditional currencies that are currently not specifically measured in the data.

A non-traditional currency that will grow is the South Korean won. South Korea is the 12th largest nation in the world in terms of gross domestic product. Geopolitically, it is an important cog in the US association of like-minded nations. In May 2024 it was announced that South Korea was in talks to join the military security partnership between the US, UK and Australia known as AUKUS. Security agreements as well as trade flows (and the financial flows that mirror these) underpin the argument for the won.

A new name on the list for the next decade is the Indian rupee. India is the fifth biggest economy and most populous nation on earth. Size counts in this debate, as we saw a decade ago with the initial adoption and enthusiasm for China’s renminbi.

India is ‘non-aligned’, and keen to have cordial relations with a wide list of nations. It is in an unusual position. On one hand, it is part of the Quad security arrangement (with the US, Japan and Australia). On the other hand, India is a key member of the Brics group and since 2022 has had a close oil trading relationship with Russia. However, it also has land border tensions with fellow Brics member China.

Comparisons to the internationalisation of the renminbi are instructive. The Chinese currency began to be held as a reserve currency by central banks from 2010 onwards despite a lack of currency convertibility. While not a substitute for deep, liquid and open capital markets, large foreign exchange reserves help to dampen currency volatility and enhance the argument for investing in the new currency.

Large foreign exchange reserves may provide comfort to global central banks who are looking to diversify their currency exposure into the rupee. This is a bold forecast – but a small slice of this story will benefit the rupee.

The euro and renminbi will also win, albeit modestly

At the turn of the century the newly launched euro was expected to go toe-to-toe with the dollar. However, the euro’s weight in reserves today has barely changed since 1999. The lack of capital market union and failure to develop a single issuer bond market to rival the depth and liquidity of the US Treasury market are two reasons. Nevertheless, as the principal alternative to the dollar, the euro will take a small extra slice of the pie and remain in clear second place.

In 2016 the forecast winner was the Chinese renminbi. Following a promising start after the 2008 financial crisis and the decision by Beijing to promote the internationalisation of the currency, success has been modest. This is despite the fast-tracked inclusion in 2016 into the IMF currency basket known as the special drawing rights.

The renminbi is currently home to around 2% of global foreign exchange reserves. The share has declined since the Russian invasion of Ukraine. Eastern European central banks such as the Czech National Bank and the Central Bank of Lithuania have both liquidated their Chinese holdings. The latter explicitly cited Ukraine as a reason.

The renminbi story has also been hampered by capital market reforms that have fallen short of expectations, and most recently by Chinese bond yields that have fallen sharply. At current levels of yield new buyers of renminbi bonds might be discouraged.

However, geopolitical fracturing has two sides to it. For some nations China will be a friend rather than a foe, will command a larger share of the trade flows with these nations and the renminbi will have appeal for the managers of reserves. Despite headwinds, the renminbi will gain a modest foreign exchange reserves share over the next decade.

Finally, the Singapore dollar already has a small slice of the foreign exchange reserves pie, and can grow modestly. Large renminbi trade invoice flows through Singapore have led to rapid growth in the demand for Singapore dollar foreign exchange swaps. If continued, this will underpin the appetite for the Singapore dollar.

What chance of a new Brics currency backed by gold?

There has been speculation that a desire to avoid the dollar might encourage the launch of a gold-backed Brics currency, and that this might become a rival trade currency to the dollar and an eventual home for foreign exchange reserves.

This is unlikely. The Brics nations (Brazil, Russia, India, China, South Africa and, since 2024, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia, Iran and Indonesia) are a heterogenous group, with differing objectives and – in the case of India and China – significant rivalries. This is not an obvious starting point for a shared currency project.

The issues involved in establishing any kind of Brics currency (gold-linked or otherwise) would be enormous. Further talk of adding nations to the Brics group would increase complexity and reduce the probability of a new currency arrangement. It will not be taking a share of the foreign exchange reserves pie in the next decade.

The conclusion must be that dollar dominance will continue to erode due to further weaponisation of the currency. But even if the weight of the greenback falls to 50%, primary dominance will be maintained because there will not be a single challenger from the pack. Instead, the next 10 years will see 10 currencies each take a small slice of the next 10% of dollar erosion.

Source: Gary Smith

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Owen Li

Economic

As one of the most competitive economies globally, it consistently ranks among the top nations for providing a business-friendly environment.

Since achieving independence in 1965, Singapore has undergone a remarkable transformation. From a small domestic market economy grappling with high unemployment and poverty, it has evolved into a highly developed, free-market economy driven by industrialisation and global trade.

The city-state is highly urbanised, with a population of approximately 5.96 million in 2024. English, one of Singapore’s official languages, serves as the primary medium of communication in business and government.

Singapore’s economic growth is primarily driven by exports and domestic demand. The country’s GDP experienced a significant contraction of 4.1% in 2020 due to the coronavirus pandemic. However, recovery was swift, with growth rebounding to 7.6% in 2021, the highest annual rate since 2010’s 14.5%. Growth moderated in subsequent years, with GDP expanding by 3.6% in 2022 and slowing further to 1.2% in 2023. Singapore Economy_1

While the IMF WEO October 2024 forecasted 2.6% growth in 2024, the Ministry of Trade & Industry (MTI) just said the economy grew by 4%. For 2025, the MTI sees growth slowing to a range of 1-3 %, citing geopolitical conflicts and higher uncertainty over US trade policies under the Trump administration. The IMF forecasts 2.5% growth in 2025.

The country’s GDP per capita remains one of the highest globally. In 2024, GDP per capita is estimated to be $104,127, underscoring Singapore’s status as a global economic leader.

While unemployment exists, it remains minimal due to structural changes such as outsourcing lower-skilled jobs. The unemployment rate stood at 2.7% in 2023 and is projected to come down to about 2% in 2024.

Currency and Central Bank

The Singapore dollar (SGD) is the official currency of Singapore and is divided into 100 cents. It is commonly denoted by the dollar sign ($) or S$ to distinguish it from other dollar currencies. Banknotes and coins are issued by the Monetary Authority of Singapore (MAS), the country’s central bank.

As of 2024, the Singapore dollar remains one of the strongest currencies in the Asia-Pacific region and continues to play a key role in international trade and finance. It is also among the top traded currencies globally, ranking 11th in 2021 and maintaining its prominence in recent years due to Singapore’s stable economic environment and sound financial policies.

In addition to its role as a central bank, the MAS serves as Singapore’s financial regulatory authority, overseeing banking, insurance, securities, and the broader financial sector. The MAS is currently led by its chairman, Ravi Menon, following Tharman Shanmugaratnam’s tenure.

Inflation in Singapore has moderated after reaching a peak of 6.1% in 2022. In 2023, inflation eased to 4.8%, reflecting tighter monetary policies and stabilising global supply chains.

According to official data from MAS, core and headline inflation in 2025 are both expected to average 1.5 – 2.5%, compared to the 2024 forecast of 2.5 – 3.0% and around 2.5%, respectively.

Industry and Trade

Singapore’s economy is predominantly driven by the services and industrial sectors. According to the Singapore Department of Statistics, services industries contributed over 70% to the nominal value added, while goods-producing industries accounted for about 25%.

The manufacturing sector remains a cornerstone of Singapore’s industrial landscape, comprising approximately 18.6% of GDP. Key industries include electronics, petrochemicals, biomedical sciences, logistics, and transport engineering. Notably, the electronics cluster has experienced a resurgence, supported by strong demand for smartphone, PC, and AI-related chips, according to the Ministry of Trade and Industry (MTI).

Within the services sector, wholesale trade represents a significant portion. In the first quarter of 2024, the domestic wholesale trade index declined by 2.2% year-on-year, while the foreign wholesale trade index increased by 3.4%.

The finance and insurance sector also demonstrated robust growth, expanding by 6.7% year-on-year in the second quarter of 2024, driven by the banking and fund management segments. Singapore Economy_4

Singapore relies heavily on its export sector. Top exports include machinery and equipment, petroleum products, chemical products, miscellaneous manufactured articles, and oil bunker.

Biggest imports include machinery and equipment (including electronics), crude oil, miscellaneous manufactures and chemical products.

The nation’s primary trading partners are China, the United States, Malaysia, the European Union, Taiwan, and Hong Kong. In 2023, Mainland China, the US and Malaysia were Singapore’s top trading partners. Singapore’s exports to Mainland China exceeded Singapore’s imports from Mainland China, while Singapore’s imports from Malaysia and US exceeded exports to these trading partners.

Stock Exchanges and Capital Markets

The Singapore Exchange or SGX is the sole stock exchange in the country. It is a multi-asset exchange that operates equity, fixed income and derivatives markets, and provides listing, trading, clearing, settlement, depository, and data services. It is the largest stock market exchange in Southeast Asia, with a total of 620 listed companies, as of September 2024.

The SGX uses the FTSE Straits Times Index or STI as its benchmark index. The STI is a capitalisation-weighted stock market index that tracks the performance of the top 30 companies listed on the SGX.

Approximately 40% of the companies listed on SGX are based outside Singapore, highlighting its role as a regional financial hub. SGX positions itself as a leading offshore market for equity index derivatives, covering major Asian economies with high liquidity. Notably, the exchange has expanded its derivatives offerings, including the GIFT Nifty 50 Index Options, which saw a significant increase in trading volume in 2024.

Along with London, New York, and Tokyo, Singapore is consistently listed as one of the world’s most active trading centres. SGX continues to enhance its market infrastructure and diversify its product offerings to maintain its competitive position in the global financial landscape.

Bond Market

Singapore’s bond market continues to attract both local and foreign investors, maintaining its position as one of the most developed in Asia. The country’s AAA credit rating from major agencies reflects its strong fiscal discipline and economic stability.

Singapore Government Securities (SGS) are a cornerstone of the bond market, comprising Treasury Bills (T-bills), SGS Bonds, Singapore Savings Bonds (SSBs), and Cash Management Treasury Bills (CMTBs). T-bills are short-term securities issued at a discount and maturing in 6 months or 1 year, providing returns upon maturity. SGS Bonds, in contrast, are longer-term instruments with fixed coupon rates and periodic interest payments, available in maturities ranging from 2 to 50 years. SSBs are designed for individual investors, offering step-up interest rates over 10 years and flexible redemption options. Meanwhile, CMTBs are short-term instruments primarily used for cash management purposes.

The MAS highlights several objectives for issuing SGS Bonds and T-bills. These include creating a liquid market to facilitate efficient trading, establishing a robust government yield curve as a benchmark for pricing other debt instruments, and supporting an active secondary market for cash transactions and derivatives to enhance risk management. Furthermore, the issuance of these securities encourages participation from both domestic and international issuers and investors, bolstering the growth and global integration of Singapore’s bond market.

Real Estate Market

Singapore’s real estate market exhibited mixed trends throughout 2024. In the third quarter, private residential property prices declined by 0.7%, marking the first decrease since the second quarter of 2023. This downturn was observed across all market segments, with landed property prices falling by 3.4% and non-landed property prices experiencing a marginal increase of 0.1%. For the first three quarters of 2024, overall private housing prices rose by 1.6%, a notable slowdown compared to the 3.9% gain during the same period in 2023.

Conversely, the public housing sector demonstrated robust growth. Resale prices for public housing units increased by 9.6% in 2024, nearly doubling the 4.9% rise observed in 2023. The number of resale transactions also grew by 8% year-on-year. Despite government interventions aimed at cooling the market, such as reducing the loan-to-valuation ratio for resale flats from 80% to 75%, demand remained strong. This surge is partly attributed to supply constraints and heightened demand, with fewer newly eligible units available for sale compared to previous years.

In the luxury segment, the market faced challenges due to policy measures. The Additional Buyer’s Stamp Duty (ABSD) for foreign buyers was increased to 60% in 2024, making Singapore one of the most expensive major cities for property purchases by foreigners. This move aimed to address concerns about housing affordability for locals and to temper speculative investments.

Looking ahead, the Singapore real estate market is projected to grow from $46.58 bn in 2024 to $64.04 bn by 2029, representing a compound annual growth rate (CAGR) of 6.57%. This growth is expected to be driven by affordable housing projects and increased demand for logistics and industrial real estate. Singapore Economy_5

Source:asia fund managers

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ING

Economic

Contrary to the run-up to the ECB’s December meeting, the preparation for next week’s has been relatively quiet, at least in public. There haven’t been any controversial views about the next steps. Instead, there seems to be a growing consensus about the need for further rate cuts. Today’s comments by ECB president Christine Lagarde suggest that a 25bp rate cut at next week’s meeting is a no-brainer and that the rate cut cycle will continue.

Rate cut next week despite higher inflation

Remember that the minutes of the ECB’s December meeting already showed a growing easing bias at the European Central Bank based on doubts about the growth forecasts and the growing risk of inflation undershooting. With little new hard data since the December meeting, the ECB is currently looking at a mild version of stagflationary tendencies: continued sluggishness of the economy and accelerating inflation. Still, the ECB seems to be looking through this temporary acceleration of inflation, and even the hawks sound dovish.

The main reason for the ECB’s increased dovishness is that the December forecasts used a terminal rate of below 2%. Just to deliver the December forecasts' outcomes, the Bank will have to cut rates by a total of 100bp. Add to that the increased risks for eurozone growth stemming from the potential economic policy choices of the new US administration, and you can understand where officials are coming from.

Rate cutting will continue beyond next week's meeting

At 3%, the deposit interest rate is still restrictive and too restrictive for the eurozone economy's current weak state. The recent surge in bond yields has also worsened financial conditions in the eurozone. Even if some argue that monetary policy can do very little to solve structural issues, political instability and uncertainty in many countries will force the ECB to continue doing the heavy lifting.

Also, as long as the current inflationary pressure is anticipated to diminish over the year, the Bank is likely to overlook the present inflation resurgence. While the experience of being slow to address rising inflation will deter the ECB from adopting ultra-low rates, the desire to stay ahead of the curve remains a compelling reason to return interest rates to neutral as swiftly as possible.

This means that the ECB will continue to cut rates. Bringing them at least to the upper end of estimates for the neutral interest rate, i.e. 2.5%, seems like a no-brainer. However, if the eurozone economy remains weaker than the ECB’s December forecasts predict, cutting rates further will become unavoidable.

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Alex

Forex

Economic

Trump, who has also threatened Canada, Mexico and China with heavy duties, said on Tuesday Europe had troubling trade surpluses with the US and was "in for tariffs".

In statements to reporters before their working lunch at the Elysee Palace, both Macron and Scholz insisted that Europe was strong and the Franco-German tandem solid, while expecting difficulties.

"President Trump will, that much is already clear, be a challenge," Scholz said.

"Our position is clear. Europe is a large economic area with around 450 million citizens. We are strong. We stand together. Europe will not duck and hide."

Macron has long pushed for Europe to be more self-reliant.

"After the inauguration of a new administration in the US, it is necessary more than ever for Europeans and for our two countries to play their role of consolidating a united, strong and sovereign Europe," he said.

The two leaders mentioned the steel, car and chemicals sectors — possible targets for US tariffs — as crucial for the European economy.

Some business leaders and analysts have said Trump's first term offers evidence that he often publicly launches threats of tariffs and other measures to use as leverage, without ultimately carrying them out.

But others fear he could be emboldened by a strong popular mandate and more support in both houses of Congress.

"The European Union (EU) is very, very bad to us," Trump told reporters on Tuesday. "So they are going to be in for tariffs. It's the only way...you are going to get fairness."

Many EU countries have export-oriented economies. Already facing higher energy costs because of the war in Ukraine and a slowdown in trade with China, they do not relish the idea of a new front with the US.

"We have entered a new phase of negotiations with the US," French government spokeswoman Sophie Primas told reporters before the meeting. "Relations with President Trump are transactional. We must be as determined as the US, we must show our strength."

Both Macron — who lost snap elections last year and has had four prime ministers in 2024 alone — and Scholz, who is trailing his conservative rival in surveys before the German election next month, are weakened politically at home.

The pair have differed on many issues in recent years, slowing down decision-making in the EU and leaving a leadership void that EU institutions have struggled to fill.

"Franco-German relations must warm up very strongly and very quickly," said a French government source, speaking on condition of anonymity. "Europe won't be relaunched without a strong Franco-German couple."

But while leading German politicians have been pushing for a free trade agreement between Europe and the US, France says the EU must reject economic coercion and apply counter-tariffs if attacked.