Singapore’s economy faces a “mixed” global outlook after growing by a record pace this year, according to Prime Minister Lee Hsien Loong.
Gross domestic product rose 14.7% this year, Lee, 58, said in his New Year message released in Singapore today. That compares with the government’s November forecast of a 15% expansion. The trade ministry predicts the economy will expand 4% to 6% in 2011, an estimate reiterated by Lee.
“The outlook for the world economy is mixed,” Lee said. “The U.S. economy is still weak. Europe faces serious debt crises in Greece, Ireland and a few other countries.”
Asia has led a global recovery this year as growth in developed markets was restrained by Europe’s sovereign credit woes and U.S. unemployment that remains above 9%. Singapore’s rebound this year has fueled inflation, prompting the central bank to allow faster currency gains and leading the government to implement measures to cool the property market.
“Inflation risks for Singapore appear to be tilted toward the upside,” Alvin Liew, a Singapore-based economist at Standard Chartered Plc, said before Lee’s message. After getting a boost from manufacturing this year, Singapore’s tourism and financial services industries will increasingly drive growth in 2011, spurred by “rising regional domestic demand from China and Southeast Asia,” he said.
Currency Appreciation
The Monetary Authority of Singapore said in October it will steepen and widen the currency’s trading band while continuing to seek a “modest and gradual appreciation,” after undertaking a one-time revaluation in April. The central bank, which uses the exchange rate rather than a benchmark interest rate as its main tool to manage inflation, guides the Singapore dollar against a basket of currencies within an undisclosed band.
The Singapore dollar has climbed more than 9% against the U.S. currency this year, marking its biggest one- year gain since 1994 and the fourth-best performance in Asia excluding Japan. The currency, which rose 0.6% to $1.2823 versus the U.S. dollar today, may strengthen to $1.24 at the end of 2011, according to a central bank survey of economists published this month.
Inflation will average between 2% and 3% next year, the central bank predicts. Consumer prices rose 3.8% in November, the biggest increase in 22 months.
Fastest Growing
Singapore’s estimated expansion for 2010 would make the city of 5 million people the fastest-growing economy in the world after Qatar’s, according to International Monetary Fund estimates.
“In Asia, growth momentum is strong,” Lee said. “China and India are forging ahead, and countries in Southeast Asia are growing steadily. Hopefully Asia will continue to do well despite the weakness in developed countries, and create a favorable regional environment for Singapore.”
The economy grew 12.5% in the fourth quarter from a year earlier, Lee said. That compares with the 13.2% median estimate of 12 economists surveyed by Bloomberg News.
GDP probably increased about 6.5% this quarter from the previous three months, based on the year-on-year number given by Lee today, said Song Seng Wun, an economist at CIMB Research Pte in Singapore. Liew at Standard Chartered estimates growth of 6.3%. That compares with the median forecast for an annualized 9.4% expansion in a Bloomberg survey of eight economists.
The economy contracted 18.7% from July to September. The trade ministry will release the fourth-quarter economic report at 8 a.m. on Jan. 3.
Companies Expand
The island’s biggest companies are boosting operations or expanding overseas as the global economy recovers from last year’s slump. DBS Group Holdings Ltd., Southeast Asia’s biggest bank, said this month it will take over Royal Bank of Scotland Group Plc.’s retail and commercial banking businesses in China.
Neptune Orient Lines, owner of Asia’s second-largest container line and controlled by Singapore state-investment fund Temasek Holdings Pte, in July signed a US$1.2 billion ($1.5 billion) contract for as many as 12 vessels with Daewoo Shipbuilding & Marine Engineering Co.
Singapore, the second-busiest container port globally, is located at the southern end of the 600-mile (966-kilometer) Malacca Strait, the world’s busiest sea lane. The island has remained vulnerable to fluctuations in overseas demand for manufactured goods even after the government boosted financial services and tourism.
Lure of Casinos
The country’s first casinos opened this year as part of so- called integrated resorts run by Genting Singapore Plc and Las Vegas Sands Corp., luring tourists to their gambling centers, restaurants, malls and a Universal Studios theme park.
“The tourism-related sectors continued to do well as Singapore continued to hit record tourist arrivals month after month so far in 2010, with a significant role played by the integrated resorts,” said Liew of Standard Chartered. The casino-resorts “may have added 1%age point to headline GDP growth in 2010, excluding the potential spillover impact to other tourism-related industries such as hotels, food and beverage and even the real estate market.”
The city state added 82,000 jobs in the nine months through September, pushing the unemployment rate to 2.1%, the lowest level in 2 1/2 years. Average wages before adjusting for inflation rose 5.4% in the third quarter from a year earlier.
“Singapore is not without challenges and problems,” Lee said. “We have to manage the inflow of foreign workers and immigrants, keep home ownership affordable to all, and help low- income Singaporeans cope with the cost of living.”
In doing so, the country needs to remain “open and welcoming to talent” and strengthen the spirit of self-reliance among Singaporeans, he said.
The global economic recovery will be “arduous” and the world faces unprecedented opportunities and challenges, China’s President Hu Jintao said in a New Year’s message broadcast today.
No comments:
Post a Comment