24 May 2018
Singapore posts solid growth to start 2018 amid global risks
Singapore’s economy remained on solid footing in the first quarter, with the government expressing more certainty of a steady pace in 2018 as global trade risks and tightening financial conditions allow for a patient monetary policy.
The rate of expansion from a year earlier gave the trade ministry enough confidence to narrow its growth forecast for 2018 to 2.5 to 3.5 percent, from a prior range of 1.5 to 3.5 percent. Manufacturing showed particular strength while construction expanded on an annual basis for the first time in a year.
Steady growth that’s within the government’s forecast range, coupled with data earlier this week showing inflation comfortably within target, should support the central bank’s plans to gradually tighten monetary policy this year. The government remains on guard for negative effects stemming from U.S.-China trade tensions and a global trend of rising interest rates.
“They already got their first tightening in, in April -- I don’t think they’re going to be in a rush,” Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore, said of the MAS officials. She sees the chance of further tightening at the October MAS meeting versus a hold in the policy stance as around 50-50, with signs now that Japan and some key economies in Europe could be slowing down.
A surge in electronics demand underpinned the city state’s 3.6 percent expansion last year, but as the export boom starts to moderate, GDP growth is set to ease to a more sustainable pace. The trade ministry expects growth to broaden out to other sectors of the economy this year, even as construction continues to lag. (Source: Bloomberg)