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WEAKNESS in the economies of Singapore's major trading partners is the main reason behind the Republic's recent lacklustre economic growth.
But even as growth is expected to be muted up to next year, emerging trade patterns within the Asean region are opening up new growth avenues for Singapore, and the country's central bank is urging the economy to seize these opportunities.
In its Macroeconomic Review October 2015 released on Tuesday, the Monetary Authority of Singapore (MAS) sketched an outlook for the global economy, and how it will be affecting Singapore's economic growth.
Wrote MAS in the report: "On balance, the Singapore economy is expected to see growth of 2-2.5% in 2015, with risks tilted to the downside."
Adding that "regional headwinds" have intensified recently, the MAS predicted that the situation would persist next year.
These regional challenges are mainly posed by the slowdown experienced by Singapore's major regional trading partners that include China, Indonesia and Malaysia.
MAS noted that total imports, in nominal US$ terms, into these economies has contracted on average by about 16 per cent since the start of this
This has had a broad effect on Singapore's economy, as these three countries account for a third of Singapore's goods exports and are also significant sources of demand for services such as tourism.
Demand from the G-3 - the US, eurozone and Japan - might provide some countervailing support in the near term, but MAS wrote that Singapore may not be able to leverage fully on the recovery in the US economy.
It noted that the step-up in US gross domestic product growth was driven mainly by domestic consumption, and growth in imports of goods and services was weak, averaging only 0.7 per cent over Q3 of 2014 to Q2 of 2015 when compared with the previous period.
Vietnam and other emerging trading partners in Asean are the bright spots in Singapore's economic outlook for the middle term.
In stating that Cambodia, Laos, Myanmar and Vietnam (CLMV) had been the main source of support for Singapore's exports thus far this year, the report said that aside from cyclical factors, "Singapore also has to respond to the ongoing changes in global supply chains".
MAS opined that deeper economic integration among Asean members should spur trade and development even further, which would in turn benefit Singapore's domestic exporters and wholesalers.
"This heralds new opportunities for Singapore and other Asean exporters, which extend beyond the trade in electronics," MAS said.
Amendment note: An earlier version of this article stated that the economies of China, Indonesia and Malaysia have contracted on average by about 16 per cent since the start of this year. The percentage figure actually refers to the total imports into these economies. The article above has been revised to reflect this.