Singapore Trade and Industry Minister Lim Hng Kiang on Monday played down risks the fast-growing city-state's economy would overheat as inflation was expected to fall between the government's forecast range of 1.5 to 2 per cent this year.
Mr Lim said he was confident that Asian economies could weather an economic slowdown in the United States, which is the region's largest export market.Mr Lim also said he was confident growth prospects would not be hurt by a slowdown in the global economy thanks to demand from within Asia.
'The economy is growing very strongly. There are some supply constraints, and we are taking steps to relieve the supply constraints with regard to manpower and space. So we don't see serious overheating problems,' he said.
His comments came after some economists warned that the US$129 billion economy may overheat as strong wage and employment growth, as well as rising office and residential rents, have helped push inflation to a 12-year high.
He acknowledged that 'overall there is strong price pressure' from rising food and energy costs but reiterated the government's inflation forecast of 1.5 to 2 per cent for this year.
'We believe inflation can come in at this range because in the first half of the year we had very good numbers,' he told reporters at a factory opening.
'In the second half, we are seeing inflation at around 2.5 (per cent), so I think overall for the year, you'll come in at between 1.5 and 2 (per cent).'
Prime Minister Lee Hsien Loong reiterated on Monday the government's target for gross domestic product growth at the upper end of a 7-8 per cent range, putting it on track to beat last year's 7.9 per cent growth rate.
Growth this year has been fuelled by a building boom, including two casino resorts for US$7 billion, a new financial district, new underground train lines, and the construction of tens of thousands of new apartments.
Mr Lim said that in spite of a slowdown in global economic growth, partly the result of credit market woes in the United States, Asian economies could cope with weakening demand from external markets.
'In Asia, momentum is still very strong. We are very confident that we would be able to ride through the slowdown in the world economy.'
He said Singapore's trade volume for 2007 was not as strong as the government had hoped, but declined to give an outlook for 2008.
Non-oil domestic exports in September fell a seasonally adjusted 1.5 per cent from August, missing expectations for a marginal rise and ending a four-month series of rising exports as weak electronics shipments failed to pick up. -- REUTERS
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