Singapore says economic growth to stall over the coming quarters

Oct 27, 2011, 6:18 GMT

Singapore - Singapore's growth was likely to stall over the next few quarters as global economic conditions deteriorate before it picks up in the second half of next year, the city-state's central bank said Thursday.

'The step-up in uncertainties in the external environment over the recent months has tilted the risks clearly towards the downside,' the Monetary Authority of Singapore said in its biannual macroeconomic review.

'Much depends on how events in the US and eurozone unfold,' it said as a sluggish US economy and debt woes in Europe dimmed growth prospects.

While Singapore's gross domestic product was expected to expand by 5 per cent this year, growth could slip below its potential rate of 3 to 5 per cent in 2012 'due in part to the near-term weakness of our key trading partners,' the report said.

In 2010, Singapore posted record growth of 14.5 per cent.

The central bank said over the next 15 months, the outlook for Singapore's economy, which is a bellwether in the region, could be divided into two phases with 'stalled growth over the next few quarters, followed by a modest recovery, probably sometime in the latter half of 2012.'

Singapore 'will not be able to avoid knock-on effects of the deteriorating external environment,' it said.

However, weaker economic conditions would alleviate price pressures, the bank said. Policymakers in the region have struggled to fight inflation over the past two years.

The central bank projected Singapore's consumer price inflation, which rose 5.7 per cent year-on-year in August and 5.5 per cent in September, to average about 5 per cent this year and to ease to 2.5 to 3.5 per cent in 2012.