According to its Trade Ministry, Singapore Gross domestic product will grow 4 percent to 6 percent in 2011, the trade ministry said in a statement. The economy, vulnerable to swings in demand for its drugs and electronics, shrank less than previously estimated in the third quarter. The nation, which has had three recessions in the past decade, won’t experience one this year, the government said today.
The expansion has fueled inflation and prompted the central bank to allow faster currency gains even as neighbors Malaysia and Thailand refrained from tightening policy this quarter. While the global economy is “vulnerable” to risks of a slump in the U.S. and a sovereign-debt crisis in Europe, Asian demand will drive the region’s growth in 2011.
The island’s currency has gained about 8 percent against the U.S. dollar this year, and closed at a record S$1.2835 on Nov. 4. It rose as much as 0.3 percent to S$1.2987 a dollar before trading at S$1.3005 as of 10:48 a.m. local time.
Currency Appreciation
According to The Monetary Authority of Singapore it will steepen and widen the currency’s trading band while continuing to seek a “modest and gradual appreciation.” Meaning to say, Singapore uses its currency rather than a benchmark interest rate as its main tool to manage inflation.
As for the GDP, it has shrank at an annualized rate of 18.7 percent in the third quarter from the previous three months, ie less than the 19.8 percent pace initially estimated last month.
Meanwhile, the International Monetary Fund estimates that Singapore 15 percent forecast rates this year would be the fastest in the world after Qatar’s.
Europe, U.S. Risk
Asian economies have led a global recovery that’s been restrained by subdued expansions in Europe and the U.S., where the jobless rate remains above 9 percent. While the Bank of Korea increased interest rates for the second time in 2010 this week after inflation surged past the central bank’s ceiling, joining India and Australia in extending monetary tightening, others have paused.
Malaysia’s central bank last week left borrowing costs unchanged for a second meeting, and Thailand last month refrained from a third straight increase. Policy makers in the Philippines to Indonesia have avoided raising rates at all this year, in part to avoid offering a greater lure to inflows of speculative capital.
Singapore hasn’t had to take “extraordinary measures” against liquidity inflows, central bank Deputy Managing Director Ong Chong Tee said today. Concerns that capital flows to emerging markets are surging have been overstated and banks are “intermediating” the capital movements, though authorities are keeping a “close eye” on inflows, Ravi Menon, permanent secretary at the trade ministry, said at a briefing today.
Manufacturing Capacity
Manufacturing, which accounts for about a quarter of Singapore’s economy, climbed 14.3 percent from a year earlier in the three months through September, after surging 46.1 percent in the second quarter.
The construction industry gained 7.1 percent, while services grew 10.1 percent. The city’s two casino resorts run by Genting Singapore Plc and Las Vegas Sands Corp. have attracted millions to their gaming centers, while employment growth is boosting spending at malls and restaurants.
Singapore’s construction industry may shrink next year and the private home market may ease, the trade ministry said today. In August, the government announced measures to cool the property market, including increasing down payments for second mortgages and imposing a stamp duty on property held for less than three years.
(Source: Bloomberg)
No comments:
Post a Comment