(Photo Credit: Gyver Chang, via Flickr)
Singapore’s growth will be dampened by external factors in 2015, says the Ministry of Trade and Industry (MTI) on Tuesday.
While we cheered about our Q3 GDP of 2.8%, which beats the forecast of 2.4-2.5% growth, external factors around the world is likely to slow growth in 2015.
Economic recovery will be mixed across different regions with economy in Malaysia and Indonesia expecting to stay resilient, thanks to healthy investment growth.
Growth in both Asian powerhouses China and Japan is likely to be sluggish due to correction in the real estate market in the former and fiscal consolidation to reduce public debt in the latter.
For China, it’s extreme fast growth has caused a bubble in the real estate market and prices has since fell for consecutive months. It’s property market accounts for 15% of GDP and the threat of it bursting may cause the downfall of China’s economy which has spillover effect other sectors such as banking and construction.
The cost of servicing Japan’s public debt is likely to eat up half of its tax revenue despite raising its consumption tax from 5-8% in 2014 and up to 10% in October 2015.
Whereas in the Eurozone, the Ukraine-Russia crisis will likely affects offshore investments due to lower business and consumer sentiments.
In the US, there are uncertainties on when the Fed will raise a hike in interest rate as they aimed to strike a balance between the dyanamics of the labour market, inflation and economic growth.
Otherwise, Singapore growth is expected to be between 2-4% in 2015, says MTI.
