Why Singapore stands to lose the most from Brexit and Trump

What do Brexit, the recent shootings in the state of Florida in the US, and US presidential candidate Donald Trump's proposed wall separating the US and Mexico have in common? All are signs globalisation is under pressure from many angles.

The aftermath of these seemingly unrelated events share a similar attitude: xenophobia. Some of the world’s wealthiest and most influential economies are moving away from the long-term trend of international openness. Protectionism is in.

This is a problem for Asia – and especially for Singapore.

Brexit and the US show signs of isolationism
The direct effects of the exit of the United Kingdom from the European Union on Asia are small. Although the UK is the fifth-largest economy in the world, trade with Britain is only a small part of Asia's total economic output. Exports to Britain are only about 0.7% of Asia's GDP. 

It's not the direct impact of Brexit that should be a worry for Asian economies. But when one of the world's largest economies chooses to pull out of the world's largest trading bloc, it reveals a lot about the popular view of globalisation and open borders. Foreign trade is being increasingly viewed as a threat – instead of a pathway to growth.

And it’s not only Britain that is showing signs of isolationism. US presidential candidate Donald Trump has been very vocal with his protectionist promises. His infamous wall along the Mexican border is just one example of his clear dislike of foreigners.

Trump's US-China trade "reform" is an important part of his proposed foreign policy platform. He argues that China is stealing American jobs and commercial secrets, while breaking the rules of international trade and manipulating its currency.

He is a strong opponent of the TPP (Trans Pacific Partnership), which would ease trade between the US and eleven other Pacific Rim countries. Part of Trump’s plans seems to involve launching a trade war with China and the rest of Asia. He’s also talked about withdrawing the US from the World Trade Organization, the foundation of global trade relations.

Following the recent shootings in a Florida nightclub, Trump renewed his call for immigration bans. A recent poll shows that 43% of Americans support Trump's proposed temporary travel ban preventing Muslims who are not American citizens from coming into the US.

And if Trump does become president and his protectionist leanings actually get put into practice it can only mean bad things for trade with Asia. 

How will anti-globalisation affect Singapore and the rest of Asia?
Much of the economy of Asia is heavily dependent on trade. In 2014, trade totaled 439% of Hong Kong's total economic output, and 351% of Singapore's. Compare that with the US, where trade totaled 30% of its GDP in 2014. 

Singapore’s exports alone came to S$530 billion (US$390 billion) in 2014. That’s more than the entire GDP of many countries in Asia (and the rest of the world).

For much of Asia, openness in international trade has been a key driver of economic growth. The unstoppable demand of American consumerism has been a source of enormous demand in many Asian economies. Higher trade tariffs with Asia – one of Trump’s main intentions – would result in higher prices for goods produced in Asia. This would hit demand in the US.

What next?
So if trade with the US decelerates, what does this mean for Asia? Countries are going to have to find new sources of demand. Markets that now rely heavily on American demand will need to diversify. Economic growth will likely slow regardless, but the countries that are better off will be the ones that are prepared for the coming changes.

And in a world where international trade diminishes, Singapore certainly stands to lose. 

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