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A DIVERGENCE in monetary policies across the world next year will cause increased uncertainty in the global economy.
Singapore, as a small and open economy, could be affected, one economist said as he cut his forecast for Singapore's overall GDP growth next year from 3.6 per cent to 3.2 per cent.
The Federal Reserve in the US is moving towards normalising interest rates gradually, with the market expecting a first hike in September.
In Japan, loose monetary policy will prevail, while the eurozone could also see more monetary stimulus, said DBS senior economist Irvin Seah.
"Such divergence in global monetary policies will have significant impact on the financial markets. Interest rate expectation will fluctuate and currencies will be volatile," he said.
"Singapore being a small and open economy will be like a small boat in rough seas."