Exports to be badly hurt by Singapore's restructuring process

What impacts could this bring?

According to DBS, the global structural shift that has been happening over the last two decades has saw this small and open economy leaning more and more towards China. 

China is at the centre of this Asia growth phenomenon and for that, Singapore’s economic fate is increasingly tied to this Asia giant. A slowdown in China will have significant ripple effects on the economy.

Here's more from DBS:

GDP growth for the year is expected to register 2.5%, up from 1.3% in 2012. For 2014, growth is forecasted to average 4.0%, on assumption that the global outlook will continue to improve.

However, the economy is hampered by the current restructuring process. So if policymakers in China are aiming for slower growth, it’ll be a double whammy on the economy.

Exports will be the hardest hit, which will have a consequential effect on the manufacturing sector. Note that excluding the EU, China is Singapore’s largest non-oil domestic export (NODX) market in 2012.

NODX to China amounts to SGD 21bn last year, which constitutes 11.8% of total NODX share. In fact, these are up significantly from just SGD 4.1bn and 3.6% in 2000.

Key export products include, high-end electronics products and components (e.g., integrated circuits), chemical and petrochemical products. In addition, Singapore’s export performance will also be affected indirectly if China’s slowdown leads to a broader Asia-wide decline in growth and trade flows.

Asia is the key market for Singapore. A moderation in the region’s demand will significantly impact Singapore’s exports and GDP growth.