News Room - Business/Economics

Posted on 11 Mar 2008

Economists expect GDP to rise by 5.7% in Q1 2008

Singapore's economy will grow 5.7 percent in the first quarter from a year ago, picking up slightly from a 5.4 percent expansion in the fourth quarter, a central bank survey showed on Monday.

However, growth in the full year will slow from last year’s pace of 7.7 percent to 5.6 percent, the Monetary Authority of Singapore's (MAS) quarterly survey of 19 economists showed.

In a statement, MAS added that the prediction also marks a downgrade from the 6.3 percent growth forecast in the December survey.

Analysts have recently lowered growth targets for economies across Asia that may suffer from weak demand for manufactured goods as the United States nears recession.

The government expects Singapore's economy to grow by between 4 and 6 percent in 2008.

Singapore's manufacturing sector, which contributes about one third of annual gross domestic product, is expected to grow 5.0 percent in 2008, slower than the projected rate of 6.8 percent in the last survey.

Meanwhile, the construction sector is seen to be leading growth in 2008, expanding 15.9 percent from a year ago, while the financial services sector is expected to grow 9.5 percent.

The survey forecasts that inflation will increase sharply in 2008, likely adding to pressure on the central bank to appreciate the currency.

The survey also forecasts that non-oil domestic exports will grow 5 percent in 2008, at the center of the government forecast for 4 to 6 percent growth.

Due to the sharp increase in food and energy costs compounded with rising real estate expenses, the MAS put the local dollar on a "slightly" faster appreciation path in October.

Singapore dollar interest rates are forecast to fall, reflecting the likelihood of further monetary easing by the U.S. Federal Reserve this year.