Elections singapore style!
Before elections, economy BOOM!
After elections, economy BUST!
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MAS says 2006 GDP growth unlikely to exceed last year's 6.4%
By Wong Choon Mei, Channel NewsAsia
SINGAPORE : The Monetary Authority of Singapore (MAS) says economic
activity has picked up since the start of this year, but it does
not expect overall economic growth in 2006 to exceed the 6.4
percent rate of last year.
In its semi-annual review out on Tuesday, the central bank says it
is sticking with its growth forecast of 4% to 6% for 2006.
In its latest review of the economy, the central bank says it
expects a livelier Japanese economy and robust Chinese and Indian
markets to offset the impact of higher oil prices.
But it says 2006 growth is unlikely to exceed last year's pace of
6.4 percent. That is despite a strong 9.1% clip in the first three
months of this year.
Analysts say the central bank may be right in being cautious,
especially given the risk of runaway oil prices.
"We have to take into consideration the downside risks we are
seeing today, with high oil prices, higher interest rates, the
possibility of a slowdown in the US and a slowdown in electronics
demand in the second half of this year," said economist Leslie Tang
at UOB-Kay Hian.
"That aside, growth in the second half of this year for Singapore
itself will be more moderate given that the growth in the second
half of last year was quite strong. We will probably see more
moderate growth from this quarter onwards," he added.
Going forward, MAS warns the global semiconductor market may slow
in the coming months after a hectic second half in 2005.
It also cautioned against over-optimism in the property market,
given that recent demand was mainly for luxury units.
"The overall expectation is for chip growth to be about 8 percent
to 9 percent this year and that is before taking into account the
impact of higher oil prices and higher interest rates. So we are
probably looking at the market slowing down and more pricing
pressure," said Kevin Scully, managing director of NRA
Capital.
"Higher or significantly higher property prices in a market where
interest rates are still rising does not make sense. We have only
seen the high-end market pick up and high-end market is usually
dominated by foreigners."
MAS expects inflation this year to remain in the 1 percent to 2
percent range, provided that oil prices do not exceed its forecast
average of US$65-US$67 per barrel.
- CNA /ls
