Singapore at risk of losing economic race in 2013

GDP growth may be a measly 3.2%.

According to DBS, notwithstanding robust expansion in Asia, growth in Singapore is expected to remain below potential on account of structural weaknesses. Singapore’s economic woes include the tightening in foreign labour inflows, strong S$ leading to falling export competitiveness, high COE premiums and high rentals; all of which imply that Singapore will continue to underperform its potential as well as against the regional peers.

Here's more from DBS:

Overall, we expect Singapore GDP growth to register 3.2% in 2013, from 1.6% in 2012. Inflation is likely to stay sticky at 4% next year, still two times higher than historical average.

Therefore, companies here, in particular the smaller SMCs, are faced with higher cost pressures and risks of lower margins. To seek growth, we suggest picking companies with a diversified earnings base, in particular one that is leveraged for growth in other Asean countries.

Except for Singapore, other Asean economies are projected to grow in excess of 5%. external growth. The country is expected to lag behind the rest of Asean with little growth and high inflation this year.

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