March inflation forecast at 5.1%

Inflation for the first half of 2011 is expected to remain elevated at 4.7 per cent, said DMG.

According to their report, the second half of 2011 will average lower at 2.6%.

DMG's key assumptions for higher inflation trajectory in the first half of this year includes higher food and transport prices as well as administrative-related costs and higher nominal wage growth in light of stellar economic growth last year.

With DMG's assumptions of tapering growth momentum in H2 11, inflation rate might subside further in the latter half of the year. On the growth front, the Singapore economy grew higher than expected at 8.5% yoy in Q1 11 (23.5% q-o-q saar) with both manufacturing and services output growth coming in higher.

DMG's growth estimates currently stand at 6.8% for H1 11 and 5.8% for H2 11. Overall, our 2011 real GDP growth forecast currently stand at 6.3%. Services sector is expected to be the key driver for the city-
state’s growth in 2011.