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SINGAPORE : The European Union (EU) remains bullish about the outlook for its bilateral trade with Singapore, despite the ongoing debt crisis in Europe.
The EU hopes to conclude negotiations for a Free Trade Agreement (FTA) with Singapore as early as next year.
It feels this will enhance their trade relationship even further.
Trade between Singapore and the European Union has been growing.
The EU said it was Singapore's largest trading partner last year, while Singapore was the EU's number one partner in ASEAN and ranked 12th globally.
Officials expect the strong trade relationship to continue despite the current debt crisis in Europe.
Holger Standertskjold, head of the EU Delegation to Singapore said: "The EU is doing its best now with its fiscal policies to improve its standing. This will have a clear impact on the companies and the economies generally, to continue its relationship with Singapore.
"At the moment, for example, the investment flows are continuing, more or less as before, and we foresee that with the FTA that we have under negotiation, this will even further increase."
Observers said an EU-Singapore FTA could lead to other similar deals with Vietnam, Thailand, Malaysia and ASEAN.
While bilateral trade may decline once austerity measures being implemented by EU member countries kick in next year, Standertskjold does not anticipate a big drop.
This is because the EU, as a bloc, remains the world's largest economy with 28 per cent of the world's GDP.
Meantime, in light of the debt crisis, one economist thinks the onus is on strong European economies like Germany to help the weaker economies such as Greece, Portugal and Spain, out of their debt crisis.
"I think it is good for them to do this to help restore confidence in the medium term future. But the important thing is these economies together account for just a little less than 15 per cent of eurozone GDP," said PK Basu, Asia chief economist, Daiwa Capital Markets.
Daiwa expects growth within the EU to remain robust till 2011, where it is expected to moderate once austerity measures for countries such as Germany and the United Kingdom kick in. - CNA /ls
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