Chart of the Day: A sharp RMB depreciation could wreak havoc on Singapore

GDP growth will head south.

Singapore will be one of the most vulnerable countries in Asia if China devalues the yuan by a stronger margin than expected, according to a report by ICAEW. 

In a scenarion where the CNY weakens by 10% vs the USD to 7.5 by the third quarter of the year and remains around that level until the end of 2017, ICAEW's model simulation shows that Chinese exports will strengthen due to the resulting boost to competitiveness.

A yuan devaluation will give a the Mainland's GDP a boost, but China’s key competitors in Asia would suffer in consequence as an improvement in China’s relative competitiveness in manufactured goods sectors hurts these countries’ exports in particular.

Singapore will be the hardest hit in this scenario, ICAEW's report shows.