Singapore Govt to review growth forecast next month
S’pore not facing stagflation, though pace of growth has slowed: Iswaran
By CHUANG PECK MING
SINGAPORE’S economy has held up well despite challenging global conditions, but the government will revisit the 4-6 per cent full-year economic growth forecast it made in May.
Relief in sight: Mr Iswaran expects inflation to ease in the current half ‘as the effects of the GST increase wash out and food prices peak’
‘We will review this forecast in August after we have compiled all the relevant data for the first half of 2008,’ Senior Minister of State for Trade and Industry S Iswaran told Parliament yesterday.
Responding to questions from Lily Neo (Jalan Besar) and Penny Low (Pasir Ris-Punggol), Mr Iswaran also said Singapore is not facing stagflation, though the pace of economic growth has slowed recently because of softer conditions worldwide.
The economy grew 4.3 per cent in the first half of this year, according to the latest advance estimates for Singapore’s gross domestic product, said Mr Iswaran.
‘This is within our medium term potential rate of growth of 4-6 per cent.’
‘We have allowed the Singapore dollar to appreciate against the US dollar. Since 2004, the Sing dollar has risen 23% against the US dollar.’
- S Iswaran,
Senior Minister of State for Trade and Industry
The job market is healthy - producing more than 73,000 jobs in the first three months of the year - and the jobless rate has stayed low, he said.
But the global economy is tipped to remain weak in the second half of the year, with the US still bothered by a credit crunch and Japan and Germany being dragged down by high energy prices and weak consumer spending.
China’s economy expanded 10.6 per cent in the first quarter, while the Indian economy grew 8.8 per cent. But both are afflicted by record inflation and have moved to cool expansion, Mr Iswaran said.
On the positive side, Singapore has a strong pipeline of foreign investments and tourism projects, including the Formula One motor race in September, he said. These ‘will provide a certain amount of support to the economy for the rest of this year’.
Mr Iswaran conceded that inflation in Singapore has shot up since the middle last year to hit 7.5 per cent in May 2008, due largely to jumps in global prices of food and fuel. He expects inflation to ease in the current half ‘as the effects of the GST increase wash out and food prices peak’.
But don’t expect the rate of inflation to return to previous levels any time soon, he said, even though ‘the government has put in place several measures to dampen inflation and to help Singaporeans cope with the higher cost of living’.
‘We have allowed the Singapore dollar to appreciate against the US dollar. Since 2004, the Singapore dollar has risen 23 per cent against the US dollar,’ said Mr Iswaran, who cautioned against sparking a domestic wage-price spiral. ‘We must take care that wage growth does not exceed growth in productivity,’ he said.
Businesses should upgrade their capabilities and sharpen their competitive edge, which ‘will give our companies the necessary capacity to withstand the challenges of slower growth as well as to capitalise on market opportunities when growth recovers’.
Source : Business Times - 22 July 2008
Singapore Property - Buy, Sell, Rent, Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com
Microsoft launches BizSpark to boost technology start-ups »« Singapore’s biggest employer still hiring
