* Singapore GDP seen growing 1.5 pct in 2012, 2.7 pct in
* Inflation seen at 4.7 pct in 2012 vs 4.4 pct previous
* Singapore dollar seen strengthening to 1.200 by end-2013
(Adds Singapore may avoid recession in Q4)
By Kevin Lim
SINGAPORE, Dec 12 Economists have cut their
economic forecasts and raised their inflation outlook for
Singapore, a central bank survey released on Wednesday showed,
in a further sign that the country is likely to face another
year of sub-par growth and elevated inflation in 2013.
Singapore, whose trade is three times gross domestic product
(GDP), has been hurt by the downturn in Western economies that
has crimped demand for its exports.
The wealthy city-state of 5.3 million people has also
underperformed neighbours such as Malaysia and Indonesia, which
can rely on their much larger populations to prop up growth.
"The key thing is Singapore's small domestic market.
Regional economies, especially in the rural household sector,
have benefitted from still strong resource prices so there is
the domestic consumption story," said CIMB regional economist
Song Seng Wun.
Economists now expect the Southeast Asian city-state's GDP
to grow 1.5 percent this year, down almost a full percentage
point from the median estimate of 2.4 percent in the previous
poll, according to the Monetary Authority of Singapore's (MAS)
latest quarterly Survey of Professional Forecasters.
In contrast, Indonesia's central bank said Tuesday it
expects full-year growth of 6.3 percent in 2012, while most
economists expect Malaysia's economy will expand by more than 5
percent this year.
However, Singapore may avoid a technical recession based on
the median estimate of 1.8 percent year-on-year growth in the
fourth quarter, which works out to an annualised
quarter-on-quarter and seasonally adjusted expansion of around 3
The city-state's economy contracted an annualised and
seasonally adjusted 5.9 percent in the third quarter from the
MAS conducts its survey every quarter after the release of
economic data for the preceding three-month period. The median
forecasts in the latest report were based on the estimates of 21
For 2013, the Singapore economy is now seen growing by just
2.7 percent, down from 3.9 percent in the previous survey but in
line with the government's latest forecast for an expansion of
1-3 percent next year.
Singapore's inflation for 2012 will likely come in at 4.7
percent this year before slowing to 3.8 percent next year, the
latest survey showed, with the latest estimates coming well
above the September survey's median forecasts.
While rising rents and soaring car prices have been the main
contributors to inflation in Singapore over the past two years,
government measures to make it harder for firms to employ
low-cost foreign workers have also contributed by pushing up the
prices of services such as healthcare.
Inflation had averaged around 2 percent prior to this
Most economists expect Singapore will face several years of
slow growth and relatively high inflation as the government
reins in immigration amid a backlash from locals unhappy about
crowded trains and competition for jobs that has depressed wages
at the lower end.
To help keep inflation in check, MAS is likely to persist
with its policy of letting the Singapore dollar rise against the
currencies of its main trading partners.
According to the MAS survey, the Singapore dollar is
likely to end the year at 1.225 to the greenback before
strengthening further to 1.200 by end-2013.
The Singapore currency, which is currently trading around
1.2210, has gained 6.2 percent so far this year, the third best
performer among Asian currencies tracked by Thomson Reuters.
"The government has made it very clear that previous high
growth rates boosted by the surge in foreign population is
pretty much unsustainable," Mark Tan, a senior economist at
Goldman Sachs in Singapore, said at a briefing on Tuesday.
"The new way going forward really is to boost domestic
productivity and the government has said we are in a period of
lower growth as the economy transitions. In that transition
phase, you are going to deal with higher wage cost, high
inflation and slower growth," he added.
Singapore's economy grew by 4.9 percent in 2011 following a
blistering 14.8 percent expansion in 2010.
2012 Current September
(year-on-year percentage survey survey
change except for exchange
GDP 1.5 2.4
- manufacturing 1.1 2.7
- financial services -0.5 1.1
non-oil domestic exports 1.6 4.2
CPI (all items) 4.7 4.4
MAS core inflation 2.6 2.5
unemployment (end-period) 2.0 2.1
exchange rate (SGD/USD) 1.225 1.250
bank loans 17.2 18.5
GDP 2.7 3.9
CPI (all items) 3.8 3.2
MAS core inflation 2.2 2.2
(Reporting by Kevin Lim; Editing by Kim Coghill)