Singapore GDP predicted to grow 4% in 2014

Asia also seen to outperform.

According to DBS, it remains optimistic about the outlook on the global economy. While it is not as bullish on the US as the market, the economy is expected to remain on a slow, albeit steady recovery path.

Against the improved global backdrop, the Singapore economy is expected to grow by 4.0% in 2014. That said, it could well have been higher if not for the structural constraints imposed by the restructuring. But nevertheless, this is still the medium term potential growth rate and in line with the objective to grow the economy by 3-5% per annum going forward.

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Moreover, the fear and risks of QE tapering was somewhat exaggerated. Ultimately, QE tapering is NOT monetary policy contraction. In fact, US monetary policy is still expansionary in nature, just less so than what it used to be. Market expectation as well as the global economy will adjust gradually to a new paradigm of higher interest rates as long as clarity remains on the direction of global monetary policies.

Eurozone is no longer a drag on the global economy. Although growth will remain sluggish against the backdrop of structural impediments, the fact that it is no longer a minus to the global economy is by itself a plus.

Asia will outperform in 2014, led by more sustainable growth in China. The Chinese economy is projected to grow by 7.8% for the year. This is slow by its historical benchmark but still fast by global standard. While there are risks in its banking system and domestic structural reforms, chance of a major blow-up remains low.