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Singapore economy to grow at ‘moderate pace’: MAS

The Republic’s GDP is expected to grow at between 2.5 per cent and 3.5 per cent this year, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review.


File photo of the Singapore skyline. (Photo: Sutrisno Foo)

SINGAPORE: The Republic’s economy is expected to grow at a moderate pace over the next few quarters, according to the Monetary Authority of Singapore (MAS).

In its half-yearly macroeconomic review released on Tuesday (Oct 28), MAS said that Singapore’s GDP growth forecast would come in at between 2.5 per cent and 3.5 per cent this year. A broadly similar pace is expected for 2015, it added.

"This should be seen in the context of the domestic economy settling down to a slower, but more sustainable growth path," it said.

The MAS report highlighted that some external-oriented sectors of the economy should benefit from the uplift in the US economy. Still, some activity in the sector may be subject to sluggish demand in the eurozone and China.

MAS also pointed out that the manufacturing sector is expected to move up the value chain towards high-margin activities such as research and development (R&D) as well as services. For instance, there has been an increase in the number of fabless semiconductor firms based in Singapore looking to expand their R&D and supply chain management operations, it said.

The share of total electronics output accounted for by these fabless semiconductor firms more than doubled from 11 per cent to 23 per cent between 2010 and 2012.

It added that the services content of Singapore's production output has also been on the rise.


On the labour market, the central bank said the tight labour supply and strong demand for workers have continued to put pressure on costs at home. It expects the labour market to remain tight in the manufacturing or non-tradable sectors.

Going forward, continued growth of industries such as financial services, information and communications, and professional services, will create job opportunities in the non-manufacturing sectors.

"Singapore may well follow the experience of the advanced economies, where the relevance of skills, rather than academic qualifications, determines the employability and wages of workers," MAS said.

On inflation, MAS said CPI-All Items inflation could ease to below 0.5 per cent in the fourth quarter of this year, due to the high base a year ago. Looking forward, overall inflation is expected to come in at about 0.5 to 1.5 per cent in 2015, compared with 1 to 1.5 per cent in 2014.

- CNA/cy

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