S'pore can reach double digit growth for 2010, but risks inflation

S'pore can reach double digit growth for 2010, but risks inflation
By Desmond Wong | Posted: 28 April 2010 2001 hrs

	Photos 1 of 1 Singapore's CBD skyline

 
SINGAPORE: Private sector economists have given a bullish forecast for Singapore's economy. Some expect double-digit growth by year-end.

But inflation could be a risk in coming months - a view also shared by the Monetary Authority of Singapore in its twice-yearly economic review released today.

Singapore's economy expanded a strong 13.1 per cent on year in the first quarter.

And given the strong showing, some economists say double digit expansion is possible by year-end.

The government's official forecast for now is seven to nine per cent growth in 2010.

Song Seng Wun, regional economist, CIMB-GK Research, says: "If we swing positive from pharma as well, given that it's 20 per cent of manufacturing, we can continue to see manufacturing continue to show headline growth in the second quarter.

"And as a result, you could get first half growth in the region of between 11 and 14 per cent, which makes the average for the full year very likely to be in the high single digits or the low teens."

Economists that Channel NewsAsia spoke to are predicting full year growth from nine to 12 per cent.

In its latest macroeconomic review, the MAS says trade-related sectors will boost growth.

Intra-regional trade is expected to pick up with the China-ASEAN Free Trade Area deal.

But stronger growth may also raise the risk of inflation, which is expected to come in at 2.5 to 3.5 per cent this year.

Irvin Seah, assistant vice president of group research, DBS, says: "We are seeing inflationary pressure building up externally with higher fuel prices, higher commodity prices.

"Domestically, it's higher asset prices, especially the pressure coming from the property market. We also have some policy induced inflationary impact, in the form of higher COE prices."

But observers don't expect the MAS to tighten monetary policy further after its aggressive adjustment earlier this month.

MAS estimates put GDP growth at three to five percent over the next decade. Experts say this does not mean that activity is expected to slow down over the next couple of years, but rather the economy is strengthening and stabilising after 18 months of volatility.

- CNA/jy 


- wong chee tat :)