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 city-state is likely to face another
year of sub-par growth and elevated inflation in 2013.
Economists now expect the Southeast Asian city-state's gross
domestic product to grow by 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
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, whose trade is three times 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 neighbouring countries such as Malaysia and
Indonesia, which can rely on their much larger populations to
prop up growth.
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
phrase, 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)