An oil price rebound could propel inflation.
Singapore inflation and growth (particularly in the manufacturing sector) outlook in 2016 will depend heavily on the energy outlook, according to a report by HSBC.
The report further asserted that much of the inflation and growth outlook relies on commodity prices. It also noted that energy is a crucial determinant of core consumer price index and Singapore is one of the few countries where energy is not stripped out of core.
Expectations are also set for oil prices to stay lower for longer. However, HSBC stated, any rebound could have inflation bounce up sooner than anticipated.
“Meanwhile, lower commodity prices are impacting Singapore’s marine and offshore engineering sector, drawing down order books. Furthermore, the low oil price environment is contributing to subdued growth in ASEAN neighbours Malaysia and Indonesia,” said the report.
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