Singapore's growth to remain subdued on back of weak demand, China linkages: Moody's

GDP growth will drop to 1.6% this year.

Singapore's GDP growth will be substantially slower this year compared to 2015, according to a report by Moody's.

Moody's expects Singapore's GDP growth to average 1.6%, after expanding by 2.0% in 2015. This forecast for 2016 is at the lower end of the Government of Singapore's estimated growth range of 1.0%-3.0%.

Growth is expected to be significantly slower than it was between 2000 and 2010, when it averaged 6.2% annually.

A slowdown in external demand will remain the key drag. Industries with high exposure to global conditions, such as engineering — including marine and offshore engineering — and oil and gas, will be most affected.

Singapore is also particularly vulnerable to the current lackluster global trade conditions. In particular, the city-state's close trade and financial linkages with China, imply that the slowdown in China presents significant challenges for Singapore, particularly given the state's role as an international financial center in the Asia Pacific region.