Singapore should not expect major government stimulus

This is despite trade facing more headwinds.

Singapore's growth momentum is likely to remain weak but hopes for a major stimulus effort on the part of the authorities will be disappointed, said UBS in a report.

According to the research house, the government is likely to continue supporting the economy through policy and stimulus at the margin. However, as with the MAS, government commentary implies a large stimulus package aimed at boosting growth 1-2ppts seems unlikely unless the economy falls into a meaningful recession.

UBS projects real GDP growth of 1.4% in 2017 and 2.0% in 2018 after 1.1% this year.

According to UBS, global trade volumes are expected to remain depressed and Singapore is arguably more exposed than most to any protectionist policies on the part of a Trump Presidency.

Moreover, the credit cycle both in the region and Singapore appears to be entering balance sheet repair phase.

"None of these dynamics are good for Singapore as a regional trade and finance hub," it said.

UBS however said that the recognition of malinvestments at home and abroad should enable Singaporean households and firms to continue the process of balance sheet repair, and that promises cleaner balance sheets and a better growth outcome in 2018.

The research house also believes that fiscal stimulus under the new U.S. President might lift Singapore's open economy more than most.