Singapore’s economy will probably expand faster than initially estimated in 2011, stoking inflation and a larger appreciation in the currency, a central bank survey showed.
Gross domestic product may increase 5.7 percent this year, after growing 14.5 percent in 2010, according to the median estimate of 20 economists in a survey by the Monetary Authority of Singapore released today. The economists predicted 2011 growth of 5.1 percent in a December poll. The Singapore dollar may strengthen to S$1.23 versus the U.S. currency by the end of 2011, the survey showed.
Singapore raised its inflation forecast for 2011 last month, and economists from Standard Chartered Plc to Citigroup Inc. predict the central bank will revalue the currency or let it appreciate faster at the policy review in April. The country’s first approach to moderate medium-term inflationary pressures is through the currency, Finance Minister Tharman Shanmugaratnam said Feb. 18.
“Managing inflation has been flagged as the key challenge to the economy this year,” Peter Redward, head of emerging Asia research at Barclays Plc in Singapore, said in a report yesterday. “We expect the Monetary Authority of Singapore to allow a faster pace of currency appreciation in its April monetary policy statement.”
The government expects growth of as much as 6 percent in 2011. The Southeast Asian island’s economy will probably expand 5.9 percent this quarter from a year earlier, the MAS survey showed. GDP rose 12 percent in the three months through December from a year earlier.
Consumer prices will probably rise 4 percent this year, according to the survey, faster than the 2.9 percent pace predicted in December. The central bank, which uses its currency rather than interest rates to manage price gains, forecasts inflation will average between 3 percent and 4 percent in 2011.
The Singapore dollar will probably end this quarter at S$1.27 versus the U.S. currency, the survey showed. It traded at S$1.2688 a dollar at 11:45 a.m. local time.
Manufacturing will probably increase 5.9 percent in 2011, the survey showed. Non-oil domestic exports may jump 10 percent, less than December’s estimate of 12 percent, according to the median forecast.
Singapore’s building industry is also forecast to slow more than economists initially expected this year with an advance of 4 percent, the survey showed. Private consumption may climb 4.9 percent, while financial services may increase 7.4 percent, according to the median of estimates.
Singapore’s unemployment rate may be 2.1 percent by the end of this quarter and fall to 2 percent by the end of the year, the survey showed. It was 2.2 percent in December.