Weaker US economy seen as slowing Singapore's 2008 growth

Oct 30, 2007, 8:11 GMT

Singapore - Singapore's economic growth is likely to slow next year amid a slump in consumer spending in the United States, the central bank said on Tuesday.

The Monetary Authority of Singapore retained its projected forecast of 4.0-6.0 per cent growth in 2008 following 7.0-8.0 per cent for this year in its twice yearly review.

The economy expanded 7.9 per cent last year.

Citing two key concerns that 'bear close monitoring,' the central bank warned of the possibility of a sharp downturn in US consumer spending arising from the ongoing correction in the housing market and global oil prices remaining at a high level.

'A scenario of a more protracted and severe slowdown in the US economy, with its attendant knock-on effects on the rest of the global economy, cannot be ruled out,' the report said.

The bank said the US, the second largest market for Singapore's non-oil exports, is likely to slow in the first six months of 2008 but recover in the second half, a scenario that would not derail the city-state's growth.

The cost of business in the city-state is also expected to rise amid continued high rents for offices.

Non-electronic manufacturing was forecast to perform strongly next year. Property and construction have received a boost from two massive casino resorts expected to be completed in 2010.