SINGAPORE, Sept 17, 2007 (AFP) - Fallout from the US subprime credit crisis has yet to strike Singapore and the city-state remains on track for 7-8 percent economic growth this year, cabinet ministers said Monday.

But they cautioned that the full impact of defaults on risky loans in the US mortgage housing sector remains to be seen, and Singapore -- Southeast Asia's most advanced economy -- could be hurt by a slowdown in the US and European economies.

"At this stage, although the risks have increased, it is not clear that there has been significant spillover into the real economy," said Minister of State for Trade and Industry S. Iswaran.

"Barring the unforeseen, the ministry of trade and industry's growth forecast of 7-8 percent for this year remains unchanged," he told parliament.

But he said this depends on whether the US and European economies -- major export markets for the island republic -- will be affected by the subprime crisis.

"If growth slows in these major economies, Singapore will be affected," he said.

"Strong growth in the region and diversity of our export markets will provide some buffer, but we are not immune to a slowdown in the major industrial economies."

Defaults on housing loans by low-grade borrowers in the United States have hammered the global financial markets on fears of a credit squeeze as these have been repackaged and sold to investment funds and banks worldwide.

The US Federal Reserve is expected to consider a cut in interest rates, when it meets Tuesday, to help improve credit flows and ease stress in the housing market.

"It is still too early to assess with a high degree of confidence how the subprime mortgage problem in the US housing market will affect the credit and other financial markets, and whether this will eventually spread to the real economy in the US and Europe," Iswaran said.

Tharman Shanmugaratnam, deputy chairman of the Monetary Authority of Singapore (MAS), the de facto central bank, said Singapore banks had negligible exposure to the US subprime credit market.

Singapore banks' total investment in collateralised debt obligations (CDOs) total 2.3 billion Singapore dollars (1.52 billion US), of which 28 percent contain some US subprime mortgages, the MAS said, amending the figures Shanmugaratnam earlier gave in parliament.

The total value of these CDOs amounts to only about one percent of the banks' capital base, said Shanmugaratnam, who is also the second minister of finance.

CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.

Losses from them are not likely to be realised unless the banks encounter defaults or are forced to sell the debt securities before maturity.

Minister for National Development Mah Bow Tan said there were no signs Singapore's booming property market has been affected.

"The property market is driven by economic fundamentals and confidence. So far, there is no sign of a negative impact from the US subprime crisis," he said in parliament.