Singapore's economic growth unlikely to hit 3.3% until 2018: ICAEW

DOMESTIC non-oil exports - and hence the manufacturing sector - are expected to remain subdued over the coming year, leaving the economy reliant on the services sector, according to ICAEW's latest "Economic Insight: South East Asia" report, which also posits that Singapore's economic growth is unlikely to hit 3.3 per cent until 2018.

Stronger government investment and solid spending by households are expected to support service sectors activity but services related to oil and re-exports will be vulnerable to continued weakness in regional trade, noted the report.

Singapore's pace of consumer spending has slowed compared to its long-term average, echoing the trend towards slower growth across the Asean-6 economies. This suggests that while financial crisis conditions are not present, the high debt-to-income ratios of close to 150 per cent in Singapore may already be hampering the country's growth potential.

"As Asean and global economies continue to struggle with the challenging backdrop, it is natural to question to what extent the rise of China and the commodity super-cycle were mistaken for structurally robust growth in some countries," said Tom Rogers, ICAEW economic adviser and associate director, Oxford Economics.

"The best performers in the Asean-6 will be economies where growth is underpinned by strong domestic fundamentals and where there is room for policy support. In this respect, we believe that Indonesia, the Philippines, and Vietnam have the best growth prospects among the Asean-6 countries, reflecting healthy domestic factors such as low debt, macro-stability and wage competitiveness. These factors will help them continue to gain market share in low-cost industries."