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The performance of the Singapore ETF (EWS) has lost some of its blue chip lustre as its economy has slowed and inflation heated up.

The Singapore government predicts 2008 GDP growth of 4-5% after a negative second quarter due to weak manufacturing and exports. The economy grew by 7.7% in 2007.

”While the US economy has avoided recession to date, the major economies are experiencing a generalized slowdown. Weaker demand in the major economies, coupled with the need to contain inflationary pressures, will dampen growth in the fast growing Asia economies,” said the ministry of trade and industry.
Manufacturing, which contracted by 5.2% in the second quarter from a year ago, dragged down growth. Construction was up 17.4% and services 7%.

The Financial Times reports that if oil prices continue to fall, the Singapore government will have more room  to pursue pro-growth policies since inflation is at a 26-year high of 7.5%.

Source: Singapore ETF Slows With Economy