THE Singapore government sees no improvement in growth prospects from this year, as conditions in advanced economies have worsened slightly since the start of 2016.
It is, however, remaining cautious in maintaining its earlier growth forecast. It sees growth at between one per cent and 3 per cent for the full year, "barring the full materialisation of downside risks", said the Ministry of Trade and Industry (MTI) in a release issued on Wednesday morning.
"The global economic outlook has weakened since early 2016, with global growth for the year now expected to be broadly similar to that in 2015. In particular, the growth outlook for the advanced economies has deteriorated marginally," it said.
Risks and uncertainties include China's ongoing reforms, said MTI. "There is a risk that ongoing reforms could have the unintended effect of precipitating a significant drop in demand," it said.
Normalising of interest rates in the United States can destabilise growth, too, as regional countries will see large capital outflows, resulting in pressures on their currencies and asset markets, said MTI.
The prospect of the United Kingdom leaving the European Union also weighed on MTI's outlook. "The loss of investor confidence amidst heightened political risks could also lead to higher debt servicing costs in the peripheral economies."
Domestically, the picture is a little more mixed.
Oil and trade-related sectors will continue to be adversely affected. Finance and insurance, and wholesale trade sectors will continue to moderate in growth but should still provide some support, said MTI.
Tourism-related sectors, on the other hand, can expect a boost in recovery, it said.