Singapore
Date: 10 May 2012
The event will be held in Singapore , with the participation of distinguished participants from academia, government, civil society, international organizations, and the press. The list of well known participants making opening remarks, presentations and commenting on the publication includes:
Ramkishen S. Rajan
Professor, Public Policy and International Economic Policy
George Mason University , USA and
Visiting Professor, LKY School
National University of Singapore
Managing Editor, Journal of International Commerce,
Economics and Policy (JICEP)
Aekapol Chongvilaivan
Fellow and Coordinator
Regional Economic Studies Programme
Institute of Southeast Asian Studies
Yusuke Tateno
Economic Affairs Officer
Macroeconomic Policy and Development Division
United Nations Economic and Social Commission for Asia and the Pacific
Country briefing note <download pdf file>
Economic growth moderating owing to weak external demand
• Singapore's highly open economy saw a record rebound of 14.8% growth in 2010, but with renewed global uncertainties, growth moderated to 4.9% in 2011, with a near 5% contraction of the economy in the fourth quarter.
• Domestic consumption and investment growth were comparable to the previous year, but net exports' contribution to GDP growth declined sharply to 0.8 percentage points, from 10.5 in 2010.
• Across the board on the supply side, externally-oriented sectors such as the electronics cluster and the wholesale and retail trade sector were negatively affected by the global slowdown.
• Steep output declines in the second and fourth quarters, however, were also driven by the emerging biomedical cluster which has exhibited high volatility.
• Manufacturing sector grew 7.6% in 2011, compared to 30% in 2010.
• Service sector growth was led by finance and tourism. Financial services grew 9% in 2011, accounting for 12% of GDP, while tourist arrivals increased.
• In 2012, export-led Singapore is forecast to grow by a slower but still robust 3%, taking into account the stronger-than-expected growth in the first quarter when electronics manufacturing and trade saw recovery, along with continued rapid growth in financial services and tourism.
Inflation driven by higher housing, transport and wage costs
• Singapore saw inflation almost double from 2.8% in 2010 to 5.2% in 2011, as higher housing and transport costs and a tight labour market pushed up prices. Higher wage costs passed through to prices of some consumer services.
• Strong Singapore dollar helped subdue imported inflation, however.
• Inflation is expected to fall back in 2012. Headline inflation moderated to 4.7% in January-February, although core inflationary pressure was more persistent and rising.
Fiscal health benefits from higher revenues
• Fiscal balance improved to a surplus of 0.7% of GDP in 2011, from 0.3% in 2010 and a deficit of 0.3% in 2009. This was due to higher-than-expected revenues and the phase out of any remaining stimulus from 2009.
• Short-term stimulus measures may be needed to support domestic demand, but there is sufficient fiscal room to do so if needed.
Monetary stance eases in late 2011 from earlier tightening
• Entering into the second half of 2011, however, a deteriorating global outlook led countries to hold off any further hikes and even reverse to easing in some cases.
• Singapore eased its policy stance in October by slowing the appreciation path of its currency. The scope of the policy band was reduced as economic activity was expected to slow, and hence ease the tightness of the labour market and alleviate core inflationary pressures.
• The domestic three-month inter-bank rate rose to 0.5% in November, before falling to 0.38% in December, where it has since remained.
Export growth moderates and portfolio inflows weaken
• Current account surplus remained high at 22% of GDP in 2011, comparable to 24% in 2010 and 19% in 2009.
• Total trade rose by 8% to reach $974 billion in 2011. Exports rose by 7.5%, moderating from the 22% increase in 2010. Domestic exports rose by 9% in the fourth quarter after the 14% expansion in the third quarter, while re-exports increased by 2.2% in the fourth quarter, reversing the 5.7% decline in the preceding quarter.
• With prolonged weak external demand from traditional markets in developed countries, it is a relief to know that South-East Asia's export base has diversified over the past decade, with a higher share of exports now going to regional markets in Asia . For instance, the share of euro zone and United States markets declined from 32% in 2000 to around 20% in 2010. This same period, however, also saw the deepening of regional supply chains, with a rising share of intermediate goods exports. ESCAP analysis shows that the subregion's export dependency on traditional markets remains quite high, once such re-exported goods are considered.
• Singapore continued to receive the bulk of foreign direct investment into the subregion, which surged to $79.4 billion in 2010, higher than the earlier peak of $75.7 billion in 2007 and double the $38 billion received in 2009. In 2011, Singapore received $41 billion in foreign direct investment.
• However, portfolio investment flow to Singapore declined 17% in 2011, when it exhibited greater volatility and large outflows were seen in the second half of the year as the United States and Europe struggled with sovereign debt issues and foreign banks seeking to recapitalize repatriated part of their funds.
• The Singapore dollar gained 6.9% against the US dollar in 2010 but lost 0.7% in 2011.
Productivity-driven growth targeted
• The Government is actively promoting productivity-driven growth in the longer term, as productivity gains have fallen in recent years due to heavier reliance on labour inputs.
Policy brief: Living with high commodity prices <download pdf file>