Published 9 March 2011
The Business Times
Singapore’s inflation rate could hit 4 per cent this year, the highest level since 2008 and at the upper end of an official forecast range of 3-4 per cent, according to the central bank’s quarterly survey of economic forecasters released on Wednesday.
The Monetary Authority of Singapore (MAS) said the median estimate of 20 private sector economists also showed inflation could hit 5.4 per cent in the first quarter.
Singapore’s annual inflation spiked up to 5.5 per cent in January, far higher than analysts’ expectations.
The MAS survey comes ahead of next month’s monetary policy review when many economists expect the central bank will allow further currency appreciation to tame inflation.
Singapore, like most other Asian countries, is grappling with higher prices due to the region’s strong economic growth, flush liquidity and stronger oil and commodity prices.
But the central bank last month was more cautious, saying its view of underlying price pressures had not changed much since its last policy review in October.
The latest survey also showed the Singapore dollar will appreciate to S$1.23 per US dollar by the end of 2011, from S$1.28 at the end of 2010. The Singapore dollar is currently trading at around S$1.2685 against the US currency, up about 1 per cent so far this year.
The city-state’s gross domestic product (GDP) will expand by 5.7 per cent in 2011, down from growth of 14.5 per cent in 2010 when Singapore witnessed the second-fastest economic growth in the world after Qatar.
Economists had predicted the economy will grow by 5.1 per cent in the last survey released in December.
The 5.7 per cent median estimate is at the upper end of the government’s 4-6 per cent growth forecast for 2011.
The survey also predicted the economy will grow at a pace of 6 per cent in 2012 and annual inflation will hit 2.8 per cent next year.
The MAS Survey of Professional Forecasters provides a summary of forecasts of Singapore’s key economic indicators by economists and analysts. The survey is conducted every three months and follows the release of quarterly economic data by the Ministry of Trade and Industry.