Singapore's weak China exports to darken domestic outlook further in 2H14

The property market slowdown could also accelerate.

The expectation of a strong second half has so far disappointed for Singapore. This has prompted Deutsche Bank to revise downward the 2014 growth outlook modestly.

According to Deutsche Bank, inflation remains muted and likely to remain so for the rest of the year, but more weakness in exports (especially to China) could darken the outlook further. The property market slowdown could accelerate, with adverse implication for household and bank balance sheets.

“The traditionally tight relationship between US PMI’s new orders and exports out of Singapore has broken down this year. Weak demand in China this year has also likely played a role in this dynamic, although the latest exports figures to China suggest the worst might be over,” noted Deutsche Bank’s report.