It's not all gloom and doom for Singapore’s economy in 2016

Property measures might be cooled, analysts say.

Supportive government policies will support Singapore’s growth this year and help the city-state survive a period of slowing growth, according to HSBC.

A report by HSBC said that Singapore’s GDP growth is expected to stay within the government’s 1-3% forecast this year. The report noted that full-year growth could still increase by 1.5% even if the country falls into recession in the first half.

HSBC said that the upcoming FY 2016 Budget is expected contain measures that will cushion the sectors affected by the slowdown, as well as short-term incentives to help revive domestic demand.

“While the government will likely continue to calibrate longerterm growth through incentivizing R&D and productivity measures, we do not rule out short-term measures to help consumption,” HSBC said.

Apart from a supportive budget, the government can also choose front-load some of the infrastructure spending unveiled in the FY15 budget in order to boost growth.

These include mega projects such as Changi Terminal 5 and other transport infrastructure, for which funds have already been allocated. However, HSBC noted that this may require tweaks to foreign worker levies to ease the any labour stress on the construction sector.

Lastly, policymakers may also start unravelling some property cooling measures—particularly those aimed at curbing Singaporean spending—to ensure that the market does not encounter a hard landing. 

“Housing prices have fallen around 8% since 2013 – while still too early to fully change policy, some tweaks may be forthcoming when prices fall 10-15%. Undoing these measures would give a boost to the various real estate related services sectors that have seen a sharp slowdown in activity in recent quarters,” HSBC said.