Singapore Proceeds with Caution as European Crisis Lingers

Despite last year’s growth, Singapore remains concerned about a potential “disorderly” European debt default and its impact on the economy.

GDP increased 10% in the past three months, while the estimate was set at 9.9% according to the Trade Ministry.

Unlike other Asian policy makers, Singapore narrowed its strategy this spring in an effort to blunt strengthening price pressures. Europe’s debt conflict appeared to have been on the mend, but certain government struggles in countries such as Greece have proved a setback in the process.

“The developments in Europe pose a significant downside risk to Singapore’s economy,” says Nomura Holdings’ Euben Paracuelles. “It’s hard for Asia to escape the repercussions if there’s a European recession and it’s accompanied by financial market instability and a banking crisis.” He added that the growth outlook for Singapore during the third quarter is “very poor.”