Question No 770 of Notice Paper No 223 of 2008
Name and Constituency of Member of Parliament
Mdm Ho Geok Choo, Member for West Coast GRC
Question
To ask the Minister for Trade and Industry in view of the easing of oil prices and food price hikes (a) whether Singapore’s annual growth rate needs to be revised; and (b) whether Singapore’s inflation rate is falling.
Answer
Global commodity prices have eased in recent weeks. Amidst weakening demand, global oil prices have declined from a high of US$147 per barrel in mid-July to less than US$110 per barrel in early September. Global food prices remain quite high, but the pace of the price increases has slowed down.
This moderation in global prices has had a positive impact on our domestic prices. The effect of the GST increase last year has also started to wear off. As a result, Singapore’s headline inflation rate has started to ease. CPI inflation moderated to 6.5 percent in July, after staying at 7.5 percent in April, May and June. We expect to see a gradual easing of inflationary pressures in the second half of the year. For the whole year, we expect inflation to average between 6 and 7 percent.
As for economic growth, the external economic outlook remains poor, and we do not expect to see a pickup in the major economies anytime soon. The US economy remains sluggish, weighed down by deleveraging and falling house prices. Europe is facing an imminent recession. Many Asian economies have reported a slowdown or decline in GDP growth in the second quarter of 2008. Some of our export-oriented manufacturing industries have been affected, such as electronics and pharmaceuticals. These sectors will dampen economic growth.
Last month, when MTI revised the growth forecast for this year to between 4 to 5 percent, it took into account these existing factors. However, the dramatic developments in the US financial industry over the past few days have created new uncertainties. We are closely monitoring these latest developments in the external environment and assessing their impact on our economy.
Mdm Ho Geok Choo, Member for West Coast GRC
Question
To ask the Minister for Trade and Industry in view of the easing of oil prices and food price hikes (a) whether Singapore’s annual growth rate needs to be revised; and (b) whether Singapore’s inflation rate is falling.
Answer
Global commodity prices have eased in recent weeks. Amidst weakening demand, global oil prices have declined from a high of US$147 per barrel in mid-July to less than US$110 per barrel in early September. Global food prices remain quite high, but the pace of the price increases has slowed down.
This moderation in global prices has had a positive impact on our domestic prices. The effect of the GST increase last year has also started to wear off. As a result, Singapore’s headline inflation rate has started to ease. CPI inflation moderated to 6.5 percent in July, after staying at 7.5 percent in April, May and June. We expect to see a gradual easing of inflationary pressures in the second half of the year. For the whole year, we expect inflation to average between 6 and 7 percent.
As for economic growth, the external economic outlook remains poor, and we do not expect to see a pickup in the major economies anytime soon. The US economy remains sluggish, weighed down by deleveraging and falling house prices. Europe is facing an imminent recession. Many Asian economies have reported a slowdown or decline in GDP growth in the second quarter of 2008. Some of our export-oriented manufacturing industries have been affected, such as electronics and pharmaceuticals. These sectors will dampen economic growth.
Last month, when MTI revised the growth forecast for this year to between 4 to 5 percent, it took into account these existing factors. However, the dramatic developments in the US financial industry over the past few days have created new uncertainties. We are closely monitoring these latest developments in the external environment and assessing their impact on our economy.