Singapore Economy To Grow Faster Than Expected

Source : The Straits Times, Sep 5, 2007













Singapore's full-year growth was predicted at 7.5 per cent, beating the 6.0 per cent June forecast. -- ST FILE PHOTO

SINGAPORE'S economy will probably expand faster than estimated this year, boosted by financial services and construction, according to a survey of 18 economists by the Monetary Authority of Singapore (MAS).

The Singapore economy will grow 7.5 per cent in 2007, beating the 6 per cent median forecast of economists when they were last surveyed in June, the MAS revealed on Wednesday. Growth was 7.9 per cent in 2006.

The government raised this year's growth estimate thrice since January to between 7 and 8 per cent, which would be the fastest pace in three years.

'Compared with the previous survey, this one paints a much more optimistic picture,' said Alvin Liew, an economist at United Overseas Bank Ltd. in Singapore. 'Right now there is some worry in the credit markets, but it has not unraveled in a way that is affecting the real economy.'

Singapore's economy grew at the quickest pace in two years in the second quarter, as an influx of bankers helped fuel the construction of offices and apartments.

The pace of expansion may accelerate in the second half of this year as manufacturing and service industries expand, the MAS said in its annual report on July 25. The island has 'rosy prospects' for continued growth, the central bank said.

Prime Minister Lee Hsien Loong, in his National Day Rally speech on Aug 19, raised the Republic's annual growth forecast for the next five to 10 years to between 4 per cent and 6 per cent from a previous range of 3 per cent to 5 per cent.

CONSTRUCTION
Singapore's construction industry will grow 15 per cent from an earlier forecast of 10 per cent, today's survey showed. Financial services will expand 13.5 per cent, from 10.2 per cent in the previous report.

MANUFACTURING
Manufacturing will probably rise 7.2 per cent this year, faster than a June estimate of 6.6 per cent, the report said.

NON-OIL DOMESTIC EXPORTS
Non-oil domestic exports are also expected to ease more than expected, rising 6.2 per cent this year, from an earlier forecast of 7 per cent.

Faster growth in services and construction is shielding Singapore from weaker demand for its exports as the US and European economies slow. The government has shaved eight percentage points off the corporate tax rate since 2000 to increase its competitiveness.

The nation's private-home prices climbed at the quickest pace in eight years in the second quarter, while rents for office space in the central business district are close to 10- year highs.

UNEMPLOYMENT, INFLATION
Singapore's jobless rate is forecast to fall to 2.5 per cent by the end of the year, from a 2.6 percent estimate in June. The Republic's unemployment rate declined to 2.4 per cent in the second quarter, the lowest in six years.

The nation's inflation rate is forecast to rise 1.5 per cent this year, from an earlier 1.2 per cent estimate.

The Monetary Authority last week lifted its forecast for inflation, predicting gains to be between 1 per cent and 2 per cent in 2007. The central bank said in July that inflation is expected to be at the upper half of its 0.5 per cent to 1.5 per cent range.

SING DOLLAR
Economists surveyed said the Singapore dollar will probably end this year at S$1.50 against the US currency, compared with S$1.49 in the June survey. The Singapore dollar stood at S$1.526 as of 11:52 a.m. in Singapore on Wednesday.

Q3 PERFORMANCE
Singapore's economy will probably expand 7.8 per cent in the third quarter from a year earlier, according to the report.

In 2008, the Republic's gross domestic product will likely expand 6.5 per cent, the economists forecast. That's higher than the 5.8 per cent pace in the previous survey.