Singapore’s economic growth will moderate in the second half of 2010 while prices will rise faster, the central bank said on Thursday, while making clear it remained comfortable with its current monetary policy.
The Monetary Authority of Singapore said in its annual report that higher global commodity prices and rising domestic car prices would push up consumer prices in the remainder of the year, but inflation for the whole of 2010 should stay within the 2.5-3.5 percent forecast range.
Singapore’s economy, which grew 18.1 percent in the first half compared with a year earlier, is expected to cool down in the second half of the year, thought underlying drivers of growth would remain largely intact, the monetary authority said.
It reiterated that the clouded outlook for the major industrialised economies remained a source of uncertainty, but that Asia remained firmly on a growth track.
“There is sufficient momentum from the Asian economies and domestic industries that will continue to support Singapore’s economic activity at a high level for the rest of the year,” Managing director Heng Swee Keat said in a speech launching the report.
The central bank forecast earlier this month that Singapore’s full year growth could reach 13-15 percent, making it the fastest growing economy in Asia, after a recession that lasted into the second quarter of 2009. [ID:nSGE66C0GX]
It said the current monetary policy stance of a modest and gradual appreciation of the Singapore dollar’s nominal effective exchange rate policy band remained “appropriate.”
Asked whether the monetary authority was comfortable with the performance of the Singapore dollar, which has risen 3 percent against the US dollar so far this year, deputy Managing director Ong Chong Tee said:
“Currently it is comfortably within the policy band…as long as it is within the band, we are comfortable.”
The central bank said the global economic recovery boosted its net profit for the fiscal year to March 2010 to a a record S$10.12 billion from S$9.2 billion a year earlier.
The central bank, as a money market operator, also said it planned to issue short-term bills next year, a fourth instrument for money markets, to help banks manage their liquidity.