Upbeat on Singapore economy

WITH 2007 drawing to a close, Singapore’s economy looks set to end the year on a high.

The Monetary Authority of Singapore — which is due to release its semi-annual Macroeconomic Review and monetary policy statement today — has said that it expects the economy to grow between 7 and 8 per cent this year.

And yesterday, Prime Minister Lee Hsien Loong told some 1,000 unionists and delegates at the National Trades Union Congress National Delegates’ Conference that he was optimistic the economy would grow at “the higher end of this range”.

“The outlook is generally upbeat. The economy is doing very well … With good growth, the labour market has tightened. Many reasons for unionists and workers to smile,” said Mr Lee, noting the stellar job and wage growth.

But in spite of the rosy conditions, Mr Lee said the Government — whose “job is not just to smile but continue to watch for signs of problem” — is keeping a close eye on two issues: The shaky global financial markets and the red-hot domestic property market.

The stock market jitters in recent months might have started from the sub-prime mortgage woes in the United States, but Mr Lee observed that the financial markets had been “over-confident and overdue for some correction”.

Said Mr Lee: “If it’s not been the sub-prime mortgage, it could have been something else.”

While the jury is still out on whether a recession in the US is on the horizon, Mr Lee was in no doubt that the Singaporean economy would be affected should that happen.

Even so, the Republic’s economic links with China and India — which are both growing unimpeded — would “help us weather a US downturn”, the Prime Minister added.

At home, Singapore faces an “acute shortage” of prime office space due to the economic boom. The Government is taking steps to increase the supply over the next two to three years, “to not just stabilise the market but … so that lots more businesses can come and set up in Singapore”.

Policy-makers are also monitoring the residential property market closely — especially in terms of keeping housing affordable, said the Prime Minister.

Last Friday, the Ministry of National Development withdrew its Deferred Payment Scheme for property purchases — a move that Mr Lee said would “help to dampen excessive speculation and inject some reality into the market”.

Other measures will follow if necessary, he assured Singaporeans.

Currently, the Government is releasing more land for Executive Condominiums, targeted at first-time buyers whose household income exceed $8,000 and are thus ineligible for a Central Provident Fund housing grant in buying an HDB flat.

Adding that the move was a response to the “many appeals” on raising the income ceiling, Mr Lee said there “should not be a sandwich group”.

“There is enough land in Singapore. There’s no need for anybody to get alarmed that this is the last chance and if you don’t get on, you will miss the boat,” he said.

At a separate event, Trade and Industry Minister Lim Hng Kiang said the economy is not overheating but the rising oil and commodity prices are causing inflationary pressure.

Adding that the Government still expects inflation to average between 1.5 per cent and 2 per cent this year, Mr Lim said: “I don’t see a serious problem with overheating (in the economy) … There are some supply side constraints and we’re taking steps to address them.”

Source : Today – 30 Oct 2007