City-state’s economy stalls, growth near zero
Latest GDP figures show almost no growth, 0.8 per cent against a previous average of 14 per cent. The government pledges “judicious management” but without exports the island is at risk.
Singapore (AsiaNews/Agencies) – Despite government action, Singapore’s economic growth probably nearly stalled last quarter. Gross Domestic Product probably rose an annualised 0.8 percent last quarter from the previous three months, far below the 14-16 per cent average since 2000. At the same time, the government is expected to raise the value of the currency to fight inflation.
Exports were hardest hit, down by 11 per cent because of the global recession. With a potential Greek default threatening to reverberate through world financial markets, Singapore may shift to stimulus measures just six months after its last monetary tightening.
The government had foreseen what is happening (see Jeremy Lim, “Prime Minister of Singapore: "black clouds" on the economic front,” in AsiaNews, 18 August 2011) but has been unable to stop it.
“With the U.S. and European indicators pointing to a sluggish, faltering recovery and no signs of any determined policy response, Singapore’s investment and external demand could only have deteriorated further in the third quarter, bringing down overall GDP growth,” said Vincent Conti, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd.
The island, which is near the Strait of Malacca, is one of the world’s main hubs for container shipping. As trade declines, Singapore loses.
Everyone is now waiting to see what the government will do. Various Asian central banks have cut interest rates to slow down inflation. “Singapore’s economy will probably expand at a slower pace in the next few years and the central bank will continue ‘judicious management’ of its currency to curb inflation and support growth,” Singapore’s Finance Minister Thurman Shanmugaratnam said.