See why Singapore government is "cautiously positive" on 2013 economy

Some stability seen but worrisome risks remain.

The Ministry of Trade and Industry acknowledged that the global macroeconomic conditions have stabilised in recent months against the backdrop of improved financial market conditions.

"Nevertheless, global economic growth is likely to remain subdued. In the US, while the housing market has shown signs of improvement, the strength of the economic recovery will be restrained by fiscal tightening. In the Eurozone, economic growth is expected to remain stagnant, weighed down by ongoing fiscal tightening, private sector deleveraging, as well as high unemployment rates," MTI said.

"In Asia, growth is likely to be moderate, supported by resilient domestic demand and modest growth in external demand," it added.

MTI said that against this macroeconomic backdrop, the outlook for the Singapore economy remains cautiously positive.

MTI maintained its 2013 economic growth forecast at 1.0 to 3.0 per cent.

While downside risks have receded, the global economic outlook is still clouded with uncertainties. In particular, concerns remain over the extent of the fiscal cutback with the budget sequester in the US, as well as the potential flare-up of the debt crisis in the Eurozone. Should any of these risks materialise, Singapore’s economic growth could come in lower than expected.

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