Singapore economy under pressure from unwinding leverage cycle

Credit growth is decelerating.

The unwinding leverage cycle continues to pose headwinds for Singapore’s economy, a report by Morgan Stanley stated.

“Credit growth is decelerating and the property market and construction are seeing the collateral impact from that. In addition, the aging population and policy measures to wean the economy from dependence on foreign labour given the infrastructure/political/social constraints continue to exert pressure on near-term and medium-term growth,” stated the report.

Morgan Stanley stated that macro-rebalancing is needed to support the economy in the medium term, and that tapping higher growth export segments orexport destinations and improving productivity is the only sustainable answer to raise growth prospects and keep core inflation under check.

“On the former, an export growth model will remain the growth strategy, but policymakers will likely continue to focus on reshaping the export machine to cater to demand from secular trends of urbanisation, aging and growth affluence,” stated Morgan Stanley.