(Bloomberg) -- Singapore must be prepared for a more challenging trade environment going forward regardless of who wins the US presidential election in November as the city-state seeks a place in what its top trade official described as a supply chain “new order.”

“Going forward, the trading environment is going to be increasingly competitive,” Minister for Trade and Industry Gan Kim Yong told Bloomberg Television’s Haslinda Amin in an interview Monday. “Whether Mr. Donald Trump comes into power or not I think we must be prepared for a more challenging outlook.”

Trade-reliant Singapore is vulnerable to supply chain shocks. Despite its resilience to disruptions spurred by the US-China trade war and the Covid-19 pandemic, the city-state still faces heightened geopolitical risks between wars in Ukraine and in the Middle East as well as tensions between Beijing and Washington over Taiwan and in the South China Sea.

“That’s why it’s important for Singapore to continue to deepen our connectivity with our key trading partners, continue to invest in our trading infrastructure — in our ability to be able to play a role in this new order of supply chain,” Gan said. “We do expect supply chains to be rearranged over time as more and more countries are looking at in-sourcing or friend-shoring.” 

“Singapore wants to be able to play a role in this new arrangement,” he said.

Singapore relies on its status as a key financial and logistical hub in Asia to help power the economy’s growth, with the government pegging expansion in the current year to be between 1%-3%. Still, that depends largely on how the city-state’s exports fare. 

While the island’s top trade partner in China is expected to stage a slow and bumpy recovery, recent economic data showed Japan and the UK — among the city-state’s top 20 commerce partners — slipped into recession. In 2023, Singapore’s total merchandise trade contracted by 11.7% from a year ago to S$1.2 trillion, according to data from the MTI. 

Even though the government sees significant downside risks in the global economy this year, it expects manufacturing and trade-related sectors to see a gradual pickup in growth in tandem with a turnaround in global electronics demand.

With the cost of living on the rise, the city-state sought to support companies and individuals in its annual budget unveiled last week. Finance Minister Lawrence Wong proposed perks for firms, including a 50% tax rebate capped at S$40,000.

Gan said the government is focusing on upgrading the skills of its citizens to prepare them for new jobs as the labor market shifts.

--With assistance from Anand Menon.

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