Global crises slows down Singapore economy

The economy is expected to grow a mere 6 percent in 1Q11 as a result of the political unrest in the Middle East and the twin disasters in Japan.

Bank of America Merrill Lynch economist Chua Hak Bin has lowered his first quarter economic forecast two digits below the original 8 percent he predicted at the start of the year.

Chua said global crises such as the brewing trouble in various Arab countries, the rising oil prices and inflation worries are bound to affect Singapore’s economic growth.

Sluggish manufacturing figures in February and lack of activity in the construction sector were also credited for the economy’s sluggish performance.

Factory output slowed to 4.8 percent Y-O-Y two months ago, the lowest in 15 months.

“Exports have also slowed, compared to last year’s double digit figures… [which means] things are slowing down,” Chua said.

Despite the downgrade in growth forecast, MAS is still widely expected to allow the further appreciation of the Singapore dollar when it conducts its semi-annual review of monetary policy later this month.

DBS Bank said in March that it expects the central bank to favor appreciation to ward off the threat of a high inflation rate.