The US will see a rebound in economic growth from 2.1 per cent this year to 2.8 per cent in 2008, according to Rabobank. In its Financial Markets Outlook for 2008 released on Wednesday, the Dutch bank also said it believes the Singapore economy can meet the government's growth target for this year.
Rabobank noted that Singapore is currently enjoying a ride on the global boom, and benefiting from a significant recovery in domestic demand.
The Dutch lender predicted that the Singapore economy will grow by seven per cent this year, and six per cent in 2008.
"We have to look, of course, at the impact from the US housing market recession, that will see a moderation in the US economy. And Singapore being an export-leveraged economy, there may be some impact there as well," said Jan Lambregts, head of Asia research at Rabobank International.
But overall, Rabobank is keeping positive. It said that although the US sub-prime woes may dent US growth this year, the global boom will remain intact.
And as Singapore diversifies from its electronic manufacturing focus towards tourism, education and healthcare, Rabobank said, the Singapore dollar will remain resilient.
"Singapore dollar is one of Asia's most liquid, freely traded currencies. It's a good proxy play for Chinese yuan and ringgit appreciation. And Singapore's economy is robust and we have a good positive outlook there for next year, with six per cent growth. Therefore, we expect (the Singapore dollar) to hit 1.48 (against the US dollar) by year-end and 1.44 by end of 2008," said Mr Lambregts.
Rabobank also predicted that investor confidence in the financial markets will be restored over the next few weeks, and the focus will then turn to long-term fundamentals. - CNA/ac
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