Question No. 381 of Notice Paper No. 63 of 2010
Name and Constituency of Member of Parliament
Mr Liang Eng Hwa, Member for Holland-Bukit Timah GRC
Question
*381. Mr Liang Eng Hwa: To ask the Minister for Trade and Industry (a) what are the reasons for the sharp upward revision in the GDP growth forecast for 2010; (b) whether the economic growth is expected be broad based; (c) whether strong growth is likely to further fuel asset inflation and higher costs; and (d) whether the Ministry still sees downside risks on the horizon.
Answer
MTI recently revised the 2010 GDP growth forecast upwards, from 4.5 to 6.5 percent, to 7 to 9 per cent. The revised forecast takes two key factors into account.
First, the Singapore economy posted exceptionally strong growth since the beginning of the year. Based on advance estimates, Singapore’s GDP grew by 32 per cent on a quarter-on-quarter seasonally adjusted annualized basis in the first quarter of 2010. On a year-on-year basis, it expanded by 13 per cent, with robust growth rates recorded in all the key manufacturing, construction and services sectors. This indicates that the economic recovery is becoming broad based and more entrenched.
Second, the upgrade in GDP forecast also reflects further signs of improvement in external economies. Notably, the broad recovery in the US economy, coupled with buoyant domestic demand in China, will support the recovery of trade flows and benefit manufacturers and exporters in the region, including Singapore.
However, we are mindful that several downside risks remain. These include a sovereign debt crisis in Europe and a weak recovery in private final demand as fiscal stimulus measures are gradually withdrawn.
In terms of the outlook for domestic prices, we expect some inflationary pressures to emerge as the economy recovers. Specifically, wage pressures will build as the labor market tightens, while asset values could rise in tandem with the improvement in economic fundamentals. Rising global commodity prices, particularly energy prices, could also push up producer and consumer prices in the economy. The overall CPI inflation in 2010 is thus projected to be between 2.5 and 3.5 per cent. This is higher than the 0.6 per cent inflation in 2009, but lower than the 6.6 per cent inflation in 2008.
Mr Liang Eng Hwa, Member for Holland-Bukit Timah GRC
Question
*381. Mr Liang Eng Hwa: To ask the Minister for Trade and Industry (a) what are the reasons for the sharp upward revision in the GDP growth forecast for 2010; (b) whether the economic growth is expected be broad based; (c) whether strong growth is likely to further fuel asset inflation and higher costs; and (d) whether the Ministry still sees downside risks on the horizon.
Answer
MTI recently revised the 2010 GDP growth forecast upwards, from 4.5 to 6.5 percent, to 7 to 9 per cent. The revised forecast takes two key factors into account.
First, the Singapore economy posted exceptionally strong growth since the beginning of the year. Based on advance estimates, Singapore’s GDP grew by 32 per cent on a quarter-on-quarter seasonally adjusted annualized basis in the first quarter of 2010. On a year-on-year basis, it expanded by 13 per cent, with robust growth rates recorded in all the key manufacturing, construction and services sectors. This indicates that the economic recovery is becoming broad based and more entrenched.
Second, the upgrade in GDP forecast also reflects further signs of improvement in external economies. Notably, the broad recovery in the US economy, coupled with buoyant domestic demand in China, will support the recovery of trade flows and benefit manufacturers and exporters in the region, including Singapore.
However, we are mindful that several downside risks remain. These include a sovereign debt crisis in Europe and a weak recovery in private final demand as fiscal stimulus measures are gradually withdrawn.
In terms of the outlook for domestic prices, we expect some inflationary pressures to emerge as the economy recovers. Specifically, wage pressures will build as the labor market tightens, while asset values could rise in tandem with the improvement in economic fundamentals. Rising global commodity prices, particularly energy prices, could also push up producer and consumer prices in the economy. The overall CPI inflation in 2010 is thus projected to be between 2.5 and 3.5 per cent. This is higher than the 0.6 per cent inflation in 2009, but lower than the 6.6 per cent inflation in 2008.