Further slowdown could hurt through trade, financial channels.
The biggest threat to Singapore in 2016 is weak growth in the ASEAN region, according to a report by HSBC. In particular, China and Malaysia represent immediate risks as the countries are Singapore’s largest trading partners.
HSBC also notes that although the Singapore financial system is not at a high degree of banking exposure risk, a further slowdown in Malaysia and China growth could hurt Singapore through trade and financial channels.
Further, trouble could be in the cards for Singapore if foreign sentiment towards the ASEAN region sours in 2016 on top of additional tightening in the US. The country could witness net outflows, given Singapore’s role as the region’s investment conduit.
HSBC adjusts its 2015 forecast to 2.1%, following the surge in the advance estimate of Q4 GDP. However, it anticipates growth risks to lean to the downside for the coming quarters based on expectations for the trade cycle to stay weak and for consumption to wane.
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