Sub-Prime's Impact On S'pore 'Hard To Gauge'

Source : The Business Times, September 18, 2007

MAS is monitoring the situation and stands ready to inject funds if needed, says Iswaran

Mr Iswaran: 'The government's economic growth forecast for 2007 stays unchanged at 7-8 per cent'

IT is 'quite a difficult task' at present to quantify how much the US sub-prime crisis will impact Singapore, Minister of State for Trade and Industry, Mr S. Iswaran said in Parliament yesterday.

However, the risks have 'increased', and Singapore's central bank is monitoring the situation and stands ready to inject funds if needed, he said.

Mr Iswaran also said that the government's economic growth forecast for 2007 remains unchanged at 7-8 per cent, despite the recent global market turbulence.

'The growth in the region and the diversity of our export markets will provide us with some buffer, but we are not immune to a slowdown in the major industrial economies,' Mr Iswaran said. 'At this stage, although the risks have increased, it is not clear that there has been a significant spillover into the real economy.'

Second Finance Minister Tharman Shanmugaratnam added that the Monetary Authority of Singapore (MAS) will inject liquidity into the market only if there is a 'systemic crunch' - such as when normal borrowing and lending between the banks is not taking place. 'This has not been the case so far,' he said.

MAS is also working with the Singapore Exchange (SGX) to monitor its members and to ensure that there are sufficient resources in its clearing funds to meet outstanding obligations, Mr Iswaran said.

Separately, Minister for National Development Mah Bow Tan said that there is 'no sign of a negative impact' from the sub-prime crisis on the property market here.

'The property market is driven by economic fundamentals and confidence,' said Mr Mah. 'Our economic growth is still healthy.'

The property market in Singapore is currently enjoying a boom. Home prices rose some 7.9 per cent in the second quarter of the year - the biggest quarter-on-quarter gain in about seven years.

All three ministers were responding to questions from their counterparts in Parliament about the impact of the US sub-prime crisis on Singapore.