Friday, May 18, 2012

Singapore economy at risk from Eurozone crisis

Increased risk is expected to pose new threats to Singapore’s economy should the Eurozone crisis get out of control, warned the government.

As a result, the Ministry of Trade and Industry (MTI) has kept its growth forecast at one to three percent this year, while there have been positive signs recently. In fact, the economy grew by 1.6 percent in Q1 from last year, driven by the construction and services industries.

However, the MTI noted that the outlook for the rest of the year remains uncertain, given the weak chances for a recovery in the global economy. The surging growth in the US earlier this year seems to have faded while China has revised its growth prospects downwards.

The Eurozone remains the biggest risk, as worries that Greece will default on its loans have burdened financial markets.

Ow Foong Pheng, Permanent Secretary at the MTI, said changes in the Eurozone political landscape “endanger promised reforms and crisis measures”. She noted that France has just elected a new President while the Greeks will hold polls next month.

“The high level of uncertainty surrounding the euro zone's political climate and fiscal outlook will continue to weigh on the global economy. This will in turn dampen growth in Singapore's externally oriented sectors.”

The MTI believes that ‘disorderly’ default by Eurozone members “cannot be ruled out at this stage,” noting that “if it materialises, there will be considerable downside for the global economy and Singapore’s externally oriented industries”.

View the original article here

Source From Property Guru

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