Singapore's economy still plugged to major western economies

GDP growth will be modest at 2.5% in 2013.

According to Standard & Poor's, after a brisk GDP growth of 4.9% in 2011, the Singapore economy grew a lackluster 1.2% last year.

The country's economy remains plugged to the performance of major Western economies. "We expect GDP growth to be modest in 2013 (about 2.5%) based on continued weak global demand in the near term."

Here's more from S&P:

Inflation remains stubbornly high, because of a booming property market and sharp reduction in the quota of certificates for car ownership. The Consumer Price Index grew 4.6% in 2012 and 5.2% the year before, a departure from Singapore's traditionally low inflation.

The Monetary Authority of Singapore kept a neutral stance in its last meeting in October 2012, despite market expectations that monetary policy would be loosen to deal with weakening economic momentum.

However, with domestic factors contributing to inflation, the efficacy of exchange rates as a monetary tool is somewhat limited, at least in the short term.

In a bid to curb soaring property prices, the authorities announced in January 2013 its seventh round of market cooling measures since 2009. These latest steps--the most comprehensive to date--appear to have a dampening effect on the market.

We expect inflation to be lower at 3.5% for 2013, with car prices already at record levels.

The government recently published its long-term plan on population growth, with a significant portion augmented by immigrants. Although the plan was eventually passed in parliament, strong public opposition arose, stemming from the rapid immigration growth in recent years, which had strained public infrastructure. We expect the government will face hurdles in trying to balance sound policymaking with electoral demands.