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S’pore economy tipped to grow more than 6% next year

Experts revise forecasts down slightly but say construction and property will sizzle

DESPITE a cloud of gloom over the United States, private economists here expect Singapore’s economy to grow at a still-respectable rate of more than 6 per cent next year.

The upbeat finding came in a Monetary Authority of Singapore (MAS) quarterly survey of local economists.

The survey produced a median growth forecast of 6.3 per cent for next year. The median is the midpoint across the spectrum of predictions of those surveyed.

This represents a very slight downgrade from the 6.5 per cent median obtained in the previous survey conducted by the MAS in September.

‘The most likely outcome, according to the respondents, is for the Singapore economy to grow by between 6 per cent and 6.9 per cent next year,’ said the survey report.

Analysts say the US faces a possible recession in the wake of the sub-prime mortgage crisis that has triggered a global credit crunch in recent months.

Nevertheless, Singapore’s growth for this year is expected to come in higher than the market had forecast three months ago.

The median of 18 economists surveyed is for Singapore’s gross domestic product (GDP) to expand by 8 per cent this year.

That is up from the 7.5 per cent economic growth rate tipped in the previous survey.

This higher forecast follows stronger-than-expected third quarter growth of 8.9 per cent.

Economists predict that the sizzling construction sector, fuelled by the red-hot property market, will continue to power ahead at a double-digit growth rate.

However, they expect the financial services sector to expand at only slightly over half its pace this year.

The manufacturing sector is also tipped to grow at a slower rate next year.

On the other hand, the market outlook for inflation – the general rise in the price of goods and services – is that it will increase next year.

Economists’ forecasts for inflation range from a low of 2.5 per cent to a high of 4.2 per cent, but the median forecast is for consumer prices to rise by 3.7 per cent next year.

As for this year, the inflation projection was also lifted to a median of 2 per cent from 1.5 per cent in the September survey.

The higher predictions came after inflation hit a 16-year high of 3.6 per cent in October.

Although the global economy is likely to slow down further, the market is forecasting a slight improvement in Singapore export growth next year.

A stronger Singapore currency is on the cards – at least versus the US dollar, which has been on a weakening track, according to most analysts.

The Singdollar is predicted to end next year at $1.40 to the US dollar, says the median consensus.

Yesterday, the Singdollar was trading at about $1.44 to the greenback.

At least one analyst believes the local currency will strengthen to reach $1.34 to the greenback. At the other end of the range is a forecast of $1.46.

 

Source: The Straits Times 8 Dec 07

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