Bangkok (UN Information Services) – Singapore’s economy is expected to slow in 2008 as the impact of an economic slowdown in the United States weakens export demand from economies in the Asia-Pacific region, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
In its Economic and Social Survey of Asia and the Pacific, ESCAP forecast Singapore’s growth rate at 4.9 per cent in 2008, sharply down from a buoyant 7.9 per cent in 2007.
The outlook marks a reversal from the strong economic performance in recent years that has seen high growth from both private consumption and gross fixed investment. In 2007, private consumption doubled in its growth rate to 5.2 per cent from 2.5 per cent, while investment’s growth accelerated to 17.7 per cent in 2007 from 11.5 per cent a year earlier.
“The major downside risk to the growth forecast comes from the United States subprime crisis. In a worst case scenario – with the United States economy in recession and with dollar depreciation sharper than expected– the Republic of Korea, Taiwan Province of China, and Singapore would feel the greatest effects, due to their strong export focus,” ESCAP said.
ESCAP pointed to a deteriorating terms of trade over 2007, by 5.8 per cent, due to higher commodity prices, while exports were facing weaker demand in the semiconductors and other electronic product sectors.
ESCAP said inflation in Singapore is expected to accelerate to three per cent in 2008 from 2.1 per cent last year, although the Singapore dollar’s appreciation against the US dollar over 2007 has kept downward pressure on domestic price inflation.
The pressure on prices was evident in January due to higher housing costs, health care, transportation and communication, as well as higher food prices. A rise in the local goods and services tax in 2007, to seven per cent, also underpinned the price increases.
Currency appreciation against the weakening United States dollar was also evident in the early months of 2008, and came as foreign exchange reserves rose by 20 per cent between January and December 2007 to US$163.0 billion from US$134.6 billion.
Singapore’s current account surplus was higher over the year to US$45.9 billion in 2007 from US$36.4 billion in 2006. ESCAP reported the goods trade surplus increasing by US$4.7 billion, while the services trade deficit higher by US$1 billion with the surplus in the income account increasing by US$5.8 billion.
Further information on the Survey can be found at:
For more information, please contact:
Hak-Fan Lau, UN Information Services, ESCAP
Tel.: +66-2-288-1866, Mob.: +66-84700-1147
Ari Gaitanis, UN Information Services, ESCAP
Tel.: +66-2-288-1862, Fax: +66-2-288-1052