The Monetary Authority of Singapore (MAS) said the republic’s economy is on track to grow 13 per cent to 15 per cent this year, meeting the government’s forecast.
In the near term, however, economic activity will continue to ease, leading to a slower, more sustainable rate of expansion in line with the city’s growth potential in 2011.
This was revealed on Wednesday by the central bank in its twice-a-year review of the economy.
The drivers of Singapore’s growth will be different next year, the MAS said.
While manufacturing and services contributed almost evenly to GDP growth in 2010, the services sector may play a bigger role next year.
MAS said the services sector could potentially account for up to two-third of Singapore’s gross domestic product in 2011, from about half now.
Financial, trade and tourism-related sectors are likely to see stronger growth. Collectively, they are expected to contribute more than half to GDP growth next year.
Singapore’s manufacturing industries, meanwhile, may slow down going into 2011, amid signs that global IT demand is softening.
Steady Asian demand will help the domestic petrochemicals industry continue to expand, although the pace of growth is likely to be capped by a global glut in chemicals.
MAS said consumer-price inflation is expected to climb to around four per cent by year-end, and stay high in the first half of next year before moderating.
It added that rising costs of housing and domestic services would spur inflation.
Consumer prices rose 3.7 percent from a year earlier in September.
Even as demand remains sluggish in developed economies, MAS said it saw a more positive outlook for economies in Asia outside Japan, supported by robust domestic demand.
It said strong growth in the region would help Singapore’s economic prospects in 2011.
Turning to jobs, MAS said in the near term, job creation would be supported by the services sector as hiring in manufacturing and construction remain modest.
And this competition for service workers would drive up wages.
MAS said salaries were expected to go up by higher than the three per cent average yearly increase in the last 10 years.
Source : Channel NewsAsia – 27 Oct 2010