Follow Singapore Investment Immigration and Singapore Economy: The Monetary Authority of Singapore (MAS) announced its semi-annual monetary policy on the 14th, declaring that it would maintain a policy of modest and gradual appreciation of the Singapore dollar. Although preliminary economic data released on the same day showed that the country's Gross Domestic Product (GDP) contracted by 1% quarter-on-quarter in the third quarter, MAS decided to maintain its existing monetary policy, taking into account uncertainties in external demand and domestic inflationary pressures.
According to preliminary third-quarter economic data released by the Singapore Ministry of Trade and Industry, the country's GDP grew by 5.1% year-on-year in the third quarter, higher than the market's general expectation of 3.8% growth. However, on a quarter-on-quarter basis, GDP contracted by 1%, a significant decline from the revised 16.9% growth in the second quarter.
Since April 2012, MAS has adopted a policy of modest and gradual appreciation of the Singapore dollar to curb inflationary pressures, stabilize inflation expectations, and support the country's economic restructuring. In the monetary policy statement released on the 14th, MAS stated that despite recurring volatility in financial markets, the Singapore economy is expected to grow steadily for the remainder of 2013 as the external environment improves, a trend that is expected to continue into 2014.
MAS noted that the latest data shows a continued global economic recovery, though uncertainties remain, particularly regarding the recurring fiscal impasse in the United States and the potential market volatility caused by the tapering of the third round of quantitative easing. However, the gradual recovery of the U.S. labor and housing markets, the expansionary macroeconomic policies adopted by Japan, and improving business sentiment in the Eurozone will all support global economic growth. Most Asian economies have also withstood the test of recent financial market volatility and are taking measures to maintain growth.
MAS predicts that Singapore's export-oriented sectors will benefit from this, while domestic demand-driven sectors will remain resilient. It is expected that Singapore's GDP growth for 2013 will be between 2.5% and 3.5%, with the labor market maintaining full employment.
Regarding inflation, MAS pointed out that imported inflation expectations will remain subdued. However, as businesses pass on rising costs—such as rent and Certificate of Entitlement (COE) premiums—to consumers, domestic inflationary pressures may rise further. In particular, rising labor costs resulting from a persistently tight labor market will also exert pressure on core inflation levels.
MAS maintains its inflation forecast for the full year at between 2% and 3%, while the core inflation rate, excluding housing and private transport costs, is expected to be between 1.5% and 2% this year, rising to between 2% and 3% next year.
