Singapore Increases GDP Forecast

August 9, 2013 Posted by ASEAN Briefing Reading Time: 2 minutes

Aug. 9 – The outlook for Singapore’s GDP was revised upwards this past week following greater than expected growth over the first two quarters of this year. The announcement came from Singapore Prime Minister Lee Hsien Loong during his televised National Day address to the country.

Economic growth was previously projected at a GDP growth rate of between 1 to 3 percent this year. These numbers have now been revised positively by the country’s economists to between 2.5 and 3.5 percent.

Last year Singapore’s economy grew at a lethargic rate of 1.3 percent thanks to global and regional slowdowns placing pressure on the country’s domestic market. However, according to the Singapore government, growth during the second quarter of this year was a brisk 15.2 percent, the fastest growth rate the country has seen in several years.

“We have made steady progress this past year. Our economy is holding steady amidst global uncertainties. We are attracting more quality investments [and] unemployment remains low,” noted Prime Minister Lee.

An increase in exports contributed to the leap in economic growth in Singapore as the United States and other large economies have begun staging economic recoveries following the global slow-down in 2008.

“There are signs that the external economy is showing more signs of stability, be it in the U.S., Europe or here in Asia. Net exports are likely to add to growth in Singapore and around the region, and that coupled with resilient demand should see a firmer growth trajectory,” commented economist Song Seng Wun of the SIMB Group.

The Singapore dollar has weakened against other major currencies this past year, making it cheaper for these countries to import goods from Singapore – a trend that has resulted in greater international demand for Singaporean products. Growing domestic demand in the services sector has also supported this economic boost.

Of these trends, Bank of America economist Chua Hak Bin added that “the services sector in particular has strengthened considerably, led by financial services, but also business services and even wholesale trade has also improved.”

In order to reach the forecasted GDP growth of 2.5 to 3.5 percent for the year, Singapore must post third and fourth quarters with annual growth rates of 3-5.

In another positive economic sign, Singapore’s annual inflation forecast has been reduced from 3-4 percent to 2-3 percent.

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