Domestic Economy Resilient, But Won't Escape Unscathed

While the domestic economy will find strength in Singapore's job and tourism market, consumption is typically hit hard as exports fall. Whereas the vigorous labour market and strong tourist arrival growth will provide some support for domestic demand, private consumption should still fall in 2012. However, we do not expect the metric to fall as sharply as it did in 2009, bearing out the relative resilience of the domestic economy. Prevailing risks to our 2012 domestic demand outlook include a sharper deterioration of the external macroeconomic environment and an acute 'bursting' of what we view to be a bubble in Singapore's real estate market.

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