China's economic expansion has been a powerhouse for regional and global growth, boosting other countries' economies with demand for commodities and other imports. Now the reverse is happening - its slowdown is dragging down growth across the region.
In Southeast Asia, Singapore could be the worst hit, with a 1 percentage point fall in China's economic growth subtracting 1.4 percentage points from Singapore's, according to estimates from Australia & New Zealand Banking Group Ltd. China is the nation's largest export destination, taking almost 15 percent of shipments.
Malaysia, the Philippines and Vietnam will be less affected, Glenn Maguire, ANZ chief economist for South Asia, Southeast Asia and Pacific, said in a Jan. 6 note, using a sensitivity index based on the past decade of data.
"With exports accounting for a much larger percentage of its economy than its peers, Singapore automatically has the highest sensitivity," Maguire said in an interview. "To boost productivity and growth, Singapore needs to maintain the quality of its labor stock, attract the most sophisticated technologies and focus on higher value-added goods."
China will grow 6.7 percent this year, the World Bank forecast last week, down from an estimated 6.9 percent in 2015. The signs of slack growth have spilled over into financial markets, with the central bank last week depreciating the currency to the lowest level since 2011 and halting trading in the nation's stocks after big falls.
Singapore’s export-oriented economy is already feeling pain. Growth was 2.1 percent in 2015, the slowest pace in six years, mirroring the slowdown in China.
