2012-11-15 00:34:55 - Singapore Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com
Revised estimates for Q212 indicate that Singapore´s GDP contracted by 0.7% in quarter-on-quarter (q-o-q) annualised, seasonally adjusted terms (versus initial estimates of 1.1%), following a revised 9.4% expansion in Q112. The stagnant performance chimes with our view that Singapore´s economy will slow in 2012. We forecast real GDP growth of 2.6% in 2012, with growth to recover slightly to 3.6% in 2013 as Singapore´s relatively healthy domestic economy balances the deleterious effects of subdued external demand. While the two main drivers of inflation, accommodation and transportation, will remain supported over the remainder of the year, price pressure in the other components of the consumer price basket will likely subside in view of declining credit and money supply growth.
As a result
of declining inflationary pressure, as well as slow economic growth and poor export performance, we now expect the Monetary Authority of Singapore to slightly ease monetary policy at its biannual meeting in October. Our forecast for import growth to outpace export growth over the course of 2012 remains in play, and we believe that this will cause a marginal decline in the full-year current account surplus to SGD67.7bn. Over the longer term, we continue to note that Singapore is likely at the beginning of a substantial economic rebalancing that will see net exports´ contribution to overall GDP fall as the economy becomes progressively less reliant on external demand.
Key Risks To Outlook
External conditions continue to weigh on Singapore, and the possibility of a prolonged downturn among the world´s largest economies likewise continues to be a serious threat to the city-state´s growth potential. Exports, which account for roughly 208% of Singapore´s GDP, are likely entering a period of weakness, and any further deterioration in the EU, US and China could raise recessionary fears for Singapore. Thus, there is downside risk to our 2.6% growth forecast for 2012.
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