Singapore has revised down its full-year economic growth forecast for
this year amid renewed turbulence in the global financial markets.
It is now expecting growth to come in at between 5 and 6 percent instead of the original projection of 5-7 percent. This was revealed by Prime Minister Lee Hsien Loong in his National Day message on Monday.
And with the economic outlook looking more uncertain going forward, economists are not ruling out a technical recession for Singapore.
Asia, led by China and India, is expected to continue growing. But the global outlook remains uncertain.
"Europe's debt problems are far from solved, despite the recent bailout of Greece by the EU. The US economy remains sluggish. The US President and Congress have agreed to raise the debt ceiling, but have put off difficult decisions to raise taxes and cut spending. Japan has the added burden of earthquake and tsunami recovery," said Mr Lee.
"These three key economies are struggling to find the decisive leadership required to resolve their domestic challenges. This will weigh them down and dampen global prospects," he said.
That's one main reason the official forecast for Singapore's gross domestic product growth this year has been trimmed.
The revision was not a surprise, with the Monetary Authority of Singapore (MAS) alluding to it in its annual report released last month.
In fact, some private sector economists have already cut their own forecasts or are currently planning to revise their numbers.
CIMB were among the latest to downgrade its full-year forecast for Singapore economy to 4.7 percent, from its earlier projection of 6 percent.
DBS and UOB said they are currently revising their numbers downwards.
Weaker business sentiment is expected to be a drag on manufacturing activity, especially in electronics.
Mr Song Seng Wun, CIMB Research's regional economist, said: "For the full-year GDP, the slower production, the slower exports may translate to the headline GDP being bumped down slightly.....Another source of lower growth is obviously high inflation. We've got slower growth but inflation has been higher this year."
Mr Wu Kun Lung, Credit Suisse's economist, said: "We cut our 2011 and 2012 real GDP growth forecast for Singapore to 5.5% (from 6.5%) and 4.8% (from 5%), respectively, with downside risks if the European debt situation deteriorates further. We expect the 3-month Singapore SIBOR to stay unchanged at 0.44% till end-2012 (from 1% previously)."
Prime Minister Lee said the Singapore economy grew 4.9 percent in the first half. This suggests that the second-quarter GDP grew 0.5 percent year-on-year, in line with flash estimates.
Advance estimates released last month also showed the second-quarter GDP contracted 7.8 percent from the previous three months.
With growth expected to slow for the rest of the year there are now higher expectations of a technical recession, which is defined as two consecutive periods of quarter-on-quarter contraction.
But some said this could be good for Singapore.
UBS' chief investment strategist (Singapore) Kelvin Tay said: "We don't see a prolonged period of stagnant growth. In fact I think a slowdown in the third quarter might actually do the economy some good in the sense that we're a little bit too strong....in the first quarter of this year.
"If the economy slows down a little bit....it could be positive, because, don't forget, we are actually at full employment, with unemployment at an all-time low right now. So that will take some heat off the economy."
Singapore's unemployment rate in the first half remained at 2.1 percent.
Going forward, there are some bright spots for the Singapore economy. Commodity prices have been dropping recently and this could help exporters as well as rein in inflationary pressures.
Detailed second-quarter GDP data will be released on Wednesday.
It is now expecting growth to come in at between 5 and 6 percent instead of the original projection of 5-7 percent. This was revealed by Prime Minister Lee Hsien Loong in his National Day message on Monday.
And with the economic outlook looking more uncertain going forward, economists are not ruling out a technical recession for Singapore.
Asia, led by China and India, is expected to continue growing. But the global outlook remains uncertain.
"Europe's debt problems are far from solved, despite the recent bailout of Greece by the EU. The US economy remains sluggish. The US President and Congress have agreed to raise the debt ceiling, but have put off difficult decisions to raise taxes and cut spending. Japan has the added burden of earthquake and tsunami recovery," said Mr Lee.
"These three key economies are struggling to find the decisive leadership required to resolve their domestic challenges. This will weigh them down and dampen global prospects," he said.
That's one main reason the official forecast for Singapore's gross domestic product growth this year has been trimmed.
The revision was not a surprise, with the Monetary Authority of Singapore (MAS) alluding to it in its annual report released last month.
In fact, some private sector economists have already cut their own forecasts or are currently planning to revise their numbers.
CIMB were among the latest to downgrade its full-year forecast for Singapore economy to 4.7 percent, from its earlier projection of 6 percent.
DBS and UOB said they are currently revising their numbers downwards.
Weaker business sentiment is expected to be a drag on manufacturing activity, especially in electronics.
Mr Song Seng Wun, CIMB Research's regional economist, said: "For the full-year GDP, the slower production, the slower exports may translate to the headline GDP being bumped down slightly.....Another source of lower growth is obviously high inflation. We've got slower growth but inflation has been higher this year."
Mr Wu Kun Lung, Credit Suisse's economist, said: "We cut our 2011 and 2012 real GDP growth forecast for Singapore to 5.5% (from 6.5%) and 4.8% (from 5%), respectively, with downside risks if the European debt situation deteriorates further. We expect the 3-month Singapore SIBOR to stay unchanged at 0.44% till end-2012 (from 1% previously)."
Prime Minister Lee said the Singapore economy grew 4.9 percent in the first half. This suggests that the second-quarter GDP grew 0.5 percent year-on-year, in line with flash estimates.
Advance estimates released last month also showed the second-quarter GDP contracted 7.8 percent from the previous three months.
With growth expected to slow for the rest of the year there are now higher expectations of a technical recession, which is defined as two consecutive periods of quarter-on-quarter contraction.
But some said this could be good for Singapore.
UBS' chief investment strategist (Singapore) Kelvin Tay said: "We don't see a prolonged period of stagnant growth. In fact I think a slowdown in the third quarter might actually do the economy some good in the sense that we're a little bit too strong....in the first quarter of this year.
"If the economy slows down a little bit....it could be positive, because, don't forget, we are actually at full employment, with unemployment at an all-time low right now. So that will take some heat off the economy."
Singapore's unemployment rate in the first half remained at 2.1 percent.
Going forward, there are some bright spots for the Singapore economy. Commodity prices have been dropping recently and this could help exporters as well as rein in inflationary pressures.
Detailed second-quarter GDP data will be released on Wednesday.
By Ryan Huang
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment