Singapore in dire lack of capital investments

Productivity has suffered as a result.

Singapore’s trade ministry thinks the city-state needs more contribution from capital intensity, particularly machinery and equipment capital.

According to a report by Nomura, the MTI released a study suggesting the need to further encourage investments in machinery and equipment capital.

Aggregrate labour productivity growth has been on the decline in recent quarters, with the lack in capital investments one of the major drags.

Here's more from Nomura:

In our base case, we expect a FY15 fiscal deficit of 0.3% of GDP to be announced during Budget 2015 next week.

This would complement the Monetary Authority of Singapore’s (MAS) decision to ease monetary policy on 28 January (see Asia Insights - Singapore: Inter-meeting policy easing, 28 January 2015). Given the unchanged GDP growth outlook and the absence of new CPI inflation shocks, we continue to see a relatively low likelihood of further easing at the next MAS policy review in April.

Nomura adds that this would complement the Monetary Authority of Singapore’s (MAS) decision to ease monetary policy on 28 January. Given the unchanged GDP growth outlook and the absence of new CPI inflation shocks, we continue to see a relatively low likelihood of further easing at the next MAS policy review in April.