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SINGAPORE: The Monetary Authority of Singapore (MAS) is forecasting moderate growth for Singapore in the next few quarters.
In its latest half-yearly macro-economic review, the MAS said Singapore economy appears to be in a recovery phase but it is unlikely to return to rapid growth anytime soon.
While the central bank did not give any figures, economists told Channel NewsAsia that they are looking at GDP growth of between 4-6.5% for 2010.
The Singapore economy surprised economists with a sharp rebound in the second and third quarters of this year.
But in the next phase of the recovery, the MAS said growth will moderate.
And that's because the external environment will remain challenging over the next few quarters.
Economists told Channel NewsAsia that they are looking at single-digit growth for the next few quarters. They expect the recovery in other Asian economies to help Singapore.
Irvin Seah, economist at DBS Group Research, said: "Singapore is now very integrated with the countries around the region, particularly China, India, Vietnam, Indonesia.
"These four economies have done well in the recession and it's very likely they'll see strong growth next year as well. Singapore's economic linkages with all these countries have been strong over the years.
"We are already reaping the dividends of the earlier strategic move by the government. We can expect to see stronger growth from Singapore, riding on the emergence of these countries."
However, they also noted that the global economic outlook is still cloudy and could be hurt by premature monetary tightening.
Alvin Liew, economist at Standard Chartered, said: "One of the key risks is that there may be some impact from the withdrawal of quantitative easing, which is why you see a lot of governments are treading fairly carefully when they are looking into this topic."
On the labour market, MAS said that conditions have stabilised. According to the MAS, job creation in the coming year will be modest as the relatively muted job losses resulting from this downturn means that firms may be carrying surplus labour.
Analysts said that the financial services will lead the pack in terms of hiring, while the manufacturing sector will lag behind.
Meanwhile the MAS said it expects the consumer price index or inflation to remain flat in 2009 before rising between one and 2 per cent in 2010.
However, it added that this forecast does not include the impact of any potential revision to the annual value of public housing.
Forecast Singapore economist Vishnu Varathan said that if the annual values were included, it could potentially add 0.5 to one percentage point to MAS' inflation forecast.
- CNA/ir
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