Economists expect 1%-3% full-year GDP growth
The
Straits Times | March 30, 2013
Economy seen to rebound
from slow start, ahead of ministry's Q1 forecast
Singapore's
economy may have got off to a less than stellar start to the year, but
economists expect a modest recovery as the year unfolds.
Ahead
of official first-quarter economic growth data, they are sticking with fairly
upbeat full-year forecasts.
Most
expect gross domestic product (GDP) growth of 1 per cent to 3 per cent or so -
broadly in line with the official forecast.
Preliminary
GDP first-quarter data will be released by the Ministry of Trade and Industry
within the next two weeks.
This
follows a string of poor economic data recently, with last month recording weak
exports and factory output and higher than expected inflation.
"Global
demand is likely to recover, giving us some support at a time when
restructuring pains will be intensifying," said chief executive of
Centennial Asia Advisors Manu Bhaskaran.
DBS
economist Irvin Seah said while the seasonal effect of Chinese New Year dragged
down the economy, manufacturing output is likely to rebound from this month
onwards. He expects full- year growth of 3.2 per cent.
"We
are going through a bottoming-out... data from March onwards will provide a
more accurate picture of underlying economic conditions," said Mr Seah.
He
estimates the economy has grown 0.5 per cent in the first quarter of this year
compared with the same period last year.
Bank
of America Merrill Lynch economist Chua Hak Bin said the manufacturing sector
remains the main drag on growth, and will continue to bear the brunt of the
economic restructuring process.
"Singapore
is in a transition period, and the service sector's share of the economy will
increase. Robust growth in services is compensating for the weakness in
manufacturing," he said.
He
expects the economy to grow 2.5 per cent this year.
On
the inflation front, economists expect the Monetary Authority of Singapore to
stick with its current policy of allowing a modest, gradual appreciation of the
Singdollar in its April review.
Relatively
high inflation here, and the more positive global outlook support this view,
they said.
The
exchange rate is the Government's main tool to combat inflation. A stronger
Singdollar helps keep inflation lower because imports, for example, cost less
in Singdollar terms.
"Although
some of the sources of inflation in February were temporary, others - like the
impact of higher foreign worker levies and tighter controls on the use of
foreign labour - will be longer lasting," said Mr P.K. Basu, managing director
and regional head of research and economics at Maybank Kim Eng.
Mr
Seah agreed, adding there is not much room for monetary policy manoeuvring -
while inflation is likely to ease because of recent car and property market
curbs, underlying cost pressures will stay high due to restructuring. "Any
weakness in the economy is coming from restructuring and declining global
competitiveness... a strong Singdollar will complement the restructuring
process."
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