Singapore’s economy expanded a tad slower than analyst estimates in the fourth quarter of last year, but that didn’t prevent the island nation rounding out a year of record growth.
Singapore’s economy, considered a bellwether for Southeast Asia, expanded at an annualized pace of 6.9% in the October-December period from the previous quarter, rebounding from a third-quarter slump and staying on course to become the second-fastest growing economy in the world after Qatar.
The expansion followed a revised contraction of 18.9% in the third quarter in seasonally adjusted, annualized terms, the Ministry of Trade and Industry said Monday. The growth was slower than expected. The median forecast in a Dow Jones Newswires poll of 11 economists was for a 9.2% expansion.
The rebound in the fourth quarter capped a strong year for the small, trade-dependent economy, which roared back to life from a downturn in 2009 when the global financial crisis sent worldwide trade into a tailspin. The recovery last year, powered by strong demand in China, started to stoke inflationary pressures, prompting the central bank to tighten policy by guiding the Singapore dollar higher.
In 2011, inflation across the region will pose a major challenge to Asian policy makers, economists say. The Monetary Authority of Singapore is likely to wait for more data and keep a close eye on inflation ahead of its next review of monetary policy in April.
“April is a long time away and a lot will happen between now and then. But it’s clear that inflation will be a much bigger focus for the MAS,” said Credit Suisse economist Robert Prior-Wandesforde after the data were released.
The central bank said in October it would steepen and widen the local dollar’s trading band while continuing to seek a "modest and gradual appreciation." The MAS, which uses exchange rates rather than interest rates as its main tool to manage inflation, guides the Singapore dollar against a basket of currencies within an undisclosed band. The U.S. dollar fell 8.5% against the Singapore unit in 2010.
The Singapore central bank predicts inflation will average between 2% and 3% this year. Consumer prices rose 3.8% in November, the fastest pace in 22 months.
Record Growth
Singapore’s GDP grew 14.7% in 2010, marking the fastest pace of growth in the city’s 45-year history since independence and topping a 13.8% expansion in 1970. GDP contracted 1.3% in 2009.
Prime Minister Lee Hsien Loong reiterated the government’s 2011 GDP growth forecast of between 4% and 6% in his New Year message Friday. He also announced the on-year growth in GDP for the fourth quarter and the whole year in that message.
"We should rejoice in this exceptional performance, but please remember that it is also the result of special circumstances, and so is unlikely to be repeated soon," Lee said in his New Year message.
The Prime Minister flagged concerns about the weakness in the U.S. economy and the sovereign debt crisis in Europe but said that “hopefully Asia will continue to do well despite the weakness in developed countries, and create a favorable regional environment for Singapore.”
However, economists said the likely economic recovery in the U.S., Singapore’s biggest trading partner, will help the island nation’s industry in the new year.
“There is increasing confidence that the global economy is on track and the U.S. growth prospects are improving. That should support Singapore’s economy. Also, the tourism sector should get a boost from stronger regional economies,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.
Singapore’s fourth-quarter GDP rose 12.5% from a year earlier, compared with a 13.4% rise tipped by 12 analysts who gave on-year estimates in the Dow Jones survey.
Output in the manufacturing sector increased 28.2% in the fourth quarter from a year earlier compared with a 13.8% expansion in the previous quarter. Services sector output grew 8.8% on year, while the construction sector contracted 1.2% after growing 7.1% in the previous three-month period.
No comments:
Post a Comment