ingapore’s economy has seen a 1.5% contraction from July to September, only just managing to miss a technical recession. With growth during the quarter of April to May being revised up to 0.2%, from an initial contraction of 0.7%. Singapore is now expected to reach growth of around 1.5% to 2.5% in 2012.
The growth numbers projected for 2012 are a far cry from the 4.9% growth achieved last year. With the relatively dramatic fall in growth in addition to the high inflation rate, which the Singapore central bank say is going to be above their forecast, Singapore is falling behind other countries in the region. Although these countries do not face the issue of rising rents and car prices, coupled with the Singapore government discouraging employers hiring foreign workers, which in turn pushes the salaries of many low-skilled workers.
[quote align=”center” color=”#b64736″]Singapore is falling behind other countries in the region[/quote]
High inflation is forecast to continue into at least 2013, with inflation in 2012 estimated to be 4% to 4.5% and 3.5% to 4.5% in 2013, according to Singapore’s central bank. Due to the inflationary problems the central bank has maintained a stringent monetary policy saying, “The Monetary Authority of Singapore (MAS) will maintain the policy of a modest and gradual appreciation of the S$NEER (Singapore dollar nominal effective exchange rate) policy band. There will be no change to the slope and width of the policy band, as well as the level at which it is centred,”
This policy of allowing the Singapore dollar to appreciate at its own rate, without any additional central bank intervention, is intended to lessen the inflationary pressures felt by the city-state. However fixed and low-income households are the people who are most likely to be affected by low growth and high inflation, as they will have less purchasing power than before.
Many other Asian countries growth figures have also been hit, due to their significant dependence on international trade, by the slowing of exports to Western countries and China.
by Finbarr Toesland
