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Economic Growth Expected To Soften To 2.5%

Singapore’s gross domestic product (GDP) in 2019 is expected to rise by 2.5 percent, slightly lower than the 3.2 percent economic growth recorded last year, according to the Monetary Authority of Singapore (MAS), reported the Straits Times.

“This is not a bad outcome. It will bring the level of GDP closer to its potential. There is no need to stimulate the economy,” said Ravi Menon, managing director at the central bank.

More: Outlook 2019: Private Housing Supply In Singapore To Surge In 2019

He noted that Singapore’s economy performed well in 2018. However, Menon is forecasting a dip this year due to weaker external demand amidst “slower global GDP growth and the maturing of the global tech cycle”.Ravi

Consequently, he thinks that trade-related industries and the manufacturing sector will be the most affected by the softer external demand. On the other hand, the financial services segment is “likely to continue to outpace the overall economy”.

Nonetheless, the Singapore economy is “moderating towards a more sustainable pace” in accordance with the world economy, he said during the Citibank Asia Pacific Investors Conference on Wednesday (27 Feb).

Moreover, even if the GDP sees a higher drop, he thinks Singapore can cope with it. “If there is a sharper slowdown, Singapore’s healthy macroeconomic position gives it the resilience to absorb the shock.” The government also has versatility to adjust or introduce policies to mitigate the effects of a higher economic decline.

Menon said the aforementioned as Singapore’s central bank prepares to reveal its monetary policy decision in April, after the country posted its weakest year-on-year economic growth in Q4 2018. During the period, the country also saw its largest decline in factory output in over two years and the biggest drop in exports.

“What we will do (monetary policy decision in April) depends on the growth and inflation outlook then.”

MAS oversees the monetary policy by changing the Singapore dollar’s exchange rate, rather than tweaking interest rates. Last April, the central bank permitted the local currency to increase marginally for the first time in six years. Then in October 2018, it tightened monetary policy.

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