China's slowdown will affect Singapore economy: DBS

[SINGAPORE] Singapore's economy will feel the pinch as China's growth continues to slow, said DBS Bank in a research note.self storageOn the manufacturing side, exports - especially high-end electronics components - will be the hardest hit, while tourism will suffer the most amongst the services cluster.DBS senior economist Irvin Seah said yesterday: "A slowdown in China will have significant ripple effects on the Singapore economy."While Singapore has benefited greatly from a strategy of engagement with this East Asian dragon over the years, it has also made itself susceptible to the economic cycle within China."As policymakers in China aim for slower, but higher-quality growth, the focus is shifting from reliance on exports and investments to more sustainable growth led by domestic consumption.As China took up an 11.8 per cent share of Singapore's total non-oil domestic exports (NODX) last year, this restructuring will weaken the local economy's export performance.Excluding the European Union, China was Singapore's largest NODX market in 2012, amounting to $21 billion. Key exports include high-end electronics components like integrated circuits, and chemical and petrochemical products.Mr Seah also warned tha迷你倉 lower demand for Singapore's exports could be exacerbated if China's slowdown leads to a broader Asia-wide decline in growth and trade flows.Trade-dependent industries - such as wholesale trade and transportation services - will likely be weighed down as well by the moderation in intra-regional trade.Because China is Singapore's second-biggest market for visitor arrivals, Mr Seah believes the tourism industry will "likely bear the brunt of a China slowdown" in the services sector.China accounted for nearly 12 per cent (1.6 million) of the estimated 13.2 million tourists that came to Singapore in 2011, trailing only Indonesia (2.6 million)."If Chinese tourist arrivals start to decline, the effect will be felt across the entire tourism value chain from hotels to retail outlets, casinos as well as the food and beverage business," Mr Seah pointed out.He also singled out the real estate segment as one to keep an eye on, given that Chinese investors account for 5.2 per cent of the buying in the property market.With underlying cost pressures and inflation risk lingering, Mr Seah said the Monetary Authority of Singapore is unlikely to deviate from the current exchange rate policy stance in the near future.文件倉