Jul 22, 2015

    S'pore to review growth forecast for this year

    THE Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry are reviewing this year's growth forecast for the economy, taking into account the weaker output in the first half of the year as well as supporting factors in the second half.

    MAS managing director Ravi Menon said this yesterday, at the central bank's 2014/2015 annual-report media briefing. He said MAS is closely monitoring three key risks in the external environment.

    The first is Greece, where the situation remains highly uncertain. The second is China, where downside risk has increased. Third, the region where financial conditions could tighten sharply as the United States Federal Reserve hikes interest rates.

    In its annual report, MAS said Singapore's growth of 2 to 4 per cent is on track: "The global economy is expected to grow modestly (this year), underpinned by a firmer expansion in the advanced economies."

    In the US, the Fed is moving closer towards monetary policy normalisation, amid an improving economic outlook. The euro-zone economy is seeing gradual improvement, while Japan's economy is recovering as the drag from a consumption-tax hike dissipates.

    China's growth is likely to continue moderating, and the rest of Asia should benefit from improvements in exports and lower oil prices, MAS said.

    It also said there is no change to inflation forecasts. Inflation for all items in the consumer price index and MAS core inflation are expected to be lower this year, compared with last year, due to lower oil prices.

    The consumer price index is a measure of headline inflation. Core inflation excludes accommodation and private car transport.

    Headline and core inflation are projected to average -0.5 to 0.5 per cent, and 0.5 to 1.5 per cent respectively.