Singapore’s economy expanded more than economists estimated last quarter, averting a recession even after the central bank refrained from monetary stimulus as it sought to contain elevated inflation.
Gross domestic product rose an annualized 1.8% in the three months to Dec. 31 from the previous period, when it contracted a revised 6.3%, the Trade Ministry said in a statement today. The median of 11 estimates in a Bloomberg News survey was for a 1.6% expansion. The economy grew 1.2% last year, less than a quarter of 2011’s pace.
The World Bank last month raised its outlook for emerging nations in East Asia, citing a recovery in China. The expansion in Singapore, among the first in Southeast Asia to report GDP numbers for last quarter, signals the region may follow in reporting resilient growth as the global recovery quickens.
“If there’s any plus, we can say, one year down the road, and despite the fiscal cliff, the U.S. economy is in a slightly more stable growth trajectory,” Song Seng Wun, an economist at CIMB Research Pte in the city state, said before the report. “The Chinese economy looks to be in a slightly firmer growth track.”
The Singapore dollar was little changed at $1.2215 against the U.S. currency as of 7:57 a.m. local time. It gained 6.2% last year, and reached a record in October after the central bank said it would maintain a modest and gradual appreciation. A majority of analysts surveyed by Bloomberg predicted the pace of strengthening would slow.
Price Gains
Still, the third-best performance among major Asian currencies last year failed to stem inflation in a nation that uses its exchange rate rather than borrowing costs to manage prices. The central bank forecasts inflation will be in a 3.5%-to-4.5% range this year, after probably averaging more than 4.5% in 2012.
Aside from Europe’s sovereign-debt crisis, Asian nations also face threats to expansion from the impact of more than US$600 billion of spending cuts and tax increases slated to take effect in the U.S. this year. The Senate passed a bipartisan budget deal yesterday to avert some of the measures, which has yet to be accepted by the House of Representatives.
The Singapore economy shrank for four consecutive quarters through the first three months of 2009 as the country suffered its deepest recession since independence in 1965. GDP increased 1.1% in the fourth quarter from a year earlier, the Trade Ministry said today, compared with the median estimate for a 1.4% gain in the Bloomberg survey.
New Phase
Prime Minister Lee Hsien Loong on Dec. 31 reiterated a forecast for the economy to grow 1% to 3% in 2013. The island is in a “new phase” of growth where it must adjust to a slower expansion than it has become accustomed to, he said. GDP increased an average of about 6.3% in the decade through 2011.
Located at the southern end of the 600-mile (965-kilometer) Malacca Strait and home to one of the world’s busiest container ports, Singapore is grappling with a tight labour market that has helped fuel among the fastest inflation in the developed world.
The government has limited the intake of foreigners and overseas labor to avoid overcrowding and ease discontent among citizens on an island smaller than New York City. Companies are now facing hiring constraints that are stifling their expansion plans, one of the reasons Lee cited for last year’s growth slowdown.
Employment increased last year even amid a smaller annual expansion, with the jobless rate at a six-quarter low of 1.9% in the three months ended September.
The country’s tax rates are among the world’s lowest, luring investment from companies such as Rolls-Royce Holdings Plc, Europe’s largest maker of commercial aircraft and ship engines, which opened a $700 million manufacturing and assembly plant in February.
Manufacturing shrank 1.5% from a year earlier in the three months ended Dec. 31. The services industry grew 1.5% last quarter from a year earlier, while construction expanded 5.9%.
No comments:
Post a Comment