Singapore’s economy is expected to grow at the higher end of the official four to six percent forecast this year, according to the Monetary Authority of Singapore (MAS), in its recent half-yearly macroeconomic review.
The result implies that there is adequate momentum for the world economy to grow at a moderate rate in 2011.
After inflation peaked at 5.2 percent in the first quarter, MAS noted it would moderate further by approximately three percent in Q4.
“Supported by a gradual improvement in the labour market and accommodative fiscal measures, the US economy should continue on its recovery path,” said the MAS Economic Policy Group.
“In Asia ex-Japan, resilient household spending and a pick-up in business investment are expected to underpin growth.”
The central bank added that the local economy should remain supported by broad-based expansions across most sectors for the rest of the year.
However, Singapore’s economic activities may be hindered by temporary disruptions in manufacturing and trade-related services, due to supply-side interruptions in Japan following the disasters in March.
But unless there is more-than-expected collateral damage coming from a full-blown nuclear disaster, a recovery in domestic activity is expected once some normalcy is re-established in Japan.
The financial segment will also witness the development of the Asean region, in addition to current markets like China, as a source of growth opportunities.
“Notably, high net worth individuals in Asean tend to hold a higher percentage of their wealth in cash, providing a significant pool of readily-investible assets,” said MAS.
MAS believes that inflation will moderate due to base effect. But the continued increase in the cost of private road transport (excluding petrol) and accommodation will add more than one percentage point each to CPI inflation in 2011.