Singapore’s grim outlook is cause for concern


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Although the Singaporean economy ( EWS , quote ) grew 10% year on year for the first quarter of 2012 , this southeast Asian economy is starting to feel the pain of global economic woes.

The Singapore economy is highly reliant on exports because of its prominent technology industry and a thriving transport sector .

Like many other emerging market economies, Singapore is suffering from a substantial decrease in demand as the result of concerns over the euro zone.

As a result, most pundits agree it's unlikely the Singaporean economy can continue to grow at such a pace over the next year.

Euben Paracuelles, an economist for Nomura in Singapore, claims that "(i)t's hard for Asia to escape the repercussions if there's a European recession and it's accompanied by financial market instability and a banking crisis."

Going forward, the situation for economies like Singapore is difficult to discern until there is clarity from the European quagmire. As a result, investors should hesitate going long Singaporean equities at these levels.

As well, traders should stay short export-dependent economies in east Asia like Singapore, Thailand ( THD , quote ), and South Korea ( EWY , quote ) until the future of the peripheral economies of Europe becomes clear.

EWS is down 1% in today's trading.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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