2012 GDP growth could undershoot 1.5% target: PM Lee

Will 2013 be worse, then?

According to OCBC, Singapore’s 2013 growth will be at a more sustainable 2-3% range, even if 2012 growth undershoots 1.5%.

Here's more from OCBC:

PM Lee said the government is no longer aiming for ridiculously high” growth of the past, but targeting a more sustainable rate of about 2-3% a year.

He also hinted that 2012 GDP growth could undershoot the 1.5% handle. Note bank loans growth bank loans growth rebounded from 16.5% yoy in Sep to 17.9% yoy (+ 1.5% mom) in Oct. Both business and consumer loans picked up on-month, and could signal that the tight labor market continues to be supportive, especially for big-ticket items like mortgages, albeit general commerce slipped 2.3% mom.

Car loans growth going forward could remain impacted by the high COE premiums. For 2013, we tip only around 10% yoy growth in bank loans.

The SGS bond market is likely to be trading in a relatively quiet mode going into the year-end. While growth expectations are somewhat muted for 2013, the inflation environment is easing slightly – headline CPI moderated from 4.7% yoy (+0.6% mom) in Sep to 4.0% yoy (-0.2% mom) in Oct.

However, COE premiums edged higher for the 21 Nov tender, suggesting little respite for the private road transport price segment in the near-term. As such, we expect that investors may remain biased towards yield enhancement, especially higher-yielding corporate bonds for now.