High household debt, sluggish global growth key risks to local economy in 2015: IMF

Along with high financial volatility.

An extended spell of slower growth in advanced and emerging economies is the most important short-term risk to Singapore's economy, the International Monetary Fund (IMF) said in a statement.

Side effects from global financial conditions, such as a surge in financial volatility and persistent U.S. dollar strength, and a growth slowdown and financial risks in China, could also have an important impact.

This risk, along with heightened external volatility, could be exacerbated by the elevated indebtedness of the household and corporate sectors since the Global Financial Crisis.

Despite this, the republic’s strong macroeconomic fundamentals—namely a very strong external position, adequate level of foreign reserves, large fiscal buffers and strong bank balance sheets—could help absorb shocks and facilitate an effective countercyclical policy response.