Oct 29, 2009, 7:12 GMT
Singapore - Singapore was expected to see slower, steadier economic growth after two quarters of double-digit expansion because of the troubled recoveries in developed markets, the city-state's central bank said in a report Thursday.
Singapore's export-reliant economy soared out of its worst recession in history in the second and the third quarters when gross domestic product (GDP) rose 22 per cent and 14.9 per cent, respectively, from the previous quarters.
However, 'the economy is not expected to post such rapid growth in the next stage of the recovery,' the Monetary Authority of Singapore said in its semi-annual Macroeconomic Review.
'Although Asia excluding Japan has recovered strongly, concerns about the resilience of global demand remain, given the lingering weakness in developed economies' financial sectors and labour markets,' it said.
Significant uncertainties would remain in the transition to growth, driven by the private sector as governments worldwide faced the delicate task of withdrawing fiscal stimulus packages introduced in response to the global downturn, the central bank said.
'Against this backdrop, the Singapore economy is likely to settle on a more gradual expansion path,' it said, noting that it expected demand in the city-state's key external markets, like the United States and Europe, to pick up modestly going into 2010.
The uplift in the second and third quarter had prompted Singapore's government to raise its economic forecast for 2009. It now expected GDP to shrink 2 to 2.5 per cent for the whole of 2009, better than the contraction of up to 6 per cent predicted earlier.
The central bank's report said the engines of Singapore's growth would shift going into next year.
While manufacturing would recover at a moderate pace, it said, 'the services sector will account for the bulk of next year's growth.'
'Sectors which have thus far been fuelled by a strong pipeline of projects committed in the pre-recession boom years could see weaker growth ahead,' the report warned, giving construction as one example.
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