MAS: Growth expected to stay steady
Singapore central bank more optimistic about economy
Singapore's economic recovery is gathering pace due in part to the increase in global electronics demand, the Monetary Authority of Singapore (MAS) said.
While weakness remains in some sectors, growth is broadening beyond trade-related industries, with economic expansion expected to remain steady in the coming year, the central bank noted in its latest macroeconomic review out yesterday.
Forecasts tip economic growth of 2 per cent to 3 per cent this year. The final figure is expected to come in at the upper half of this range, MAS said.
It struck a noticeably more optimistic note in its latest macroeconomic review, noting that steady growth in the global economy is likely to be sustained in the short-term, amid more favourable business sentiment and tightening labour markets in developed economies.
Stronger trade growth in Asia since late last year has also led to a pickup in manufacturing activity and a rise in incomes.
In tandem with this rosier environment, Singapore's economy has expanded by an average of 4.4 per cent quarter-on-quarter in the second and third quarters - a turnaround from the contraction recorded in the first quarter of the year.
The upswing was led by trade-related sectors, which were boosted by the strength in the global electronics cycle.
Stronger growth has also been accompanied by a broadening of the recovery across more industries. Some of the strength in electronics production should carry over into next year, but growth is expected to moderate in the quarters ahead, said MAS.
Meanwhile, industry segments such as financial services and retail are expected to benefit from the improvement in the overall business climate, as well as underlying strength in regional trade and growth.
This means growth should become less patchy across sectors in the coming months, MAS said. Some segments are still struggling, however, including marine and offshore engineering, as well as construction.
CIMB Private Banking economist Song Seng Wun said the central bank appears more positive about the economic outlook compared to a year ago, back when the world was still reeling from the impact of Brexit and the election of Mr Donald Trump as the US president.
"On the whole, the economy has done better than expected, but we remain cautiously optimistic and mindful of the downside risks."
There are other indications that sentiment is picking up: The job market is showing signs of emerging from the doldrums, with a lower overall unemployment rate in the third quarter and no increase in retrenchments, according to Manpower Ministry data yesterday.
"If improvements in the labour market continue, this will be supportive of domestic consumption and further lift growth," noted Mr Song.
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