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Singapore’s economy in 2012

21 November 2011
Channel NewsAsia – AM Live

Singapore’s economy in 2012

Leon Perera, Chief Executive Officer of Spire, was interviewed on Channel NewsAsia – AM Live to discuss the prospects for Singapore’s economy in 2011 and the coming year.

Leon Perera commented that the manufacturing sector is the primary issue behind the weaker fourth quarter of 2011. He also expected 3% GDP growth in 2012. This was mainly due to weakness in global export markets. Also, the financial and business services sector, which is 25% of GDP in Singapore, would be facing some uncertainties in 2012. This is because “the health of banks will be partly dependent on what happens in Europe, whether there will be an orderly resolution of the issue. Hence, slow growth in financial and business services and definite weakness in the manufacturing sector, in particular electronics, will translate into weak growth for Singapore next year. However, on balance, we feel that Singapore will dodge the bullet of a recession, as we do not see any obvious triggers for recession globally. In fact, there are some signs of life coming back into the US economy, and even in Europe a weak Southern Europe is being counter-balanced by a stronger Germany.”

Perera added that the 5% inflation rate in Singapore was primarily driven by domestic factors, such as property and car prices. The core inflation rate (excluding these two factors) should be considerably less, at around 2 to 3%.

Commenting on the economic outlook for neighbouring countries in 2012, Perera felt that Malaysia’s economic growth would be flat with 2011. As a globalized economy that is rather export-dependent, Malaysia may be impacted by the weakness in global export demand. On the other hand, with 2012 being an election year, increased government spending would also stimulate the economy, counterbalancing the impact.

As for Indonesia, Perera was more bullish. Positive customer sentiment, strong foreign direct investment and commodities exports are some factors that would stimulate the economy in Indonesia. Hence, Indonesia’s GDP growth rate would be the same, if not higher than the figure this year.

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