Singapore economy will expand 5% in 2011:OCBC

The IR-tourism sector, healthy FDI and generous FY2011 budget may push the economic growth on the higher end of the official 4 to 6 % forecast.

In a statement, OCBC said they have increased their forecast for the economic growth from 4.5% to 5% due to the three potential drivers of the economy.

The IR-tourism sector should remain supportive of 2011 services growth. The spending of incremental visitors in the IR and the rest of the Singapore economy was estimated at $3.7b in nominal VA (1.7% of nominal GDP) in Q1-Q3 2010, and anecdotal evidence points to a likely sustaining of visitor interest given new attractions opening.

FDI remains healthy, while cited capacity expansions in electronics and biomedical clusters will support manufacturing growth this year, despite the high 2010 base.

A potentially generous FY2011 budget, especially in the form of economic infrastructure upgrading (schools, hospitals, roads, MRT extensions etc) will boost public construction spending, and provide some financial assistance to lower-income households to mitigate the rising inflation and income disparity.