SINGAPORE (Sept 22): Recent economic data suggests that Singapore is poised to enjoy the best economic conditions it has seen since 2011. The most important development is that global demand is feeding through to Singapore more palpably than before.
The global recovery is also helping Singapore’s neighbours. A stronger world economy raises demand for their exports of resources and manufactured goods while also providing more support for commodity prices.
We believe that there is a strong likelihood that economic growth will surprise on the upside for the rest of this year.
However, if this happens, then labour and production capacity will be used more intensively. That means that the slack in the economy, which has been holding inflation back, will diminish faster than policymakers had anticipated.
And, if resources start to become fully utilised more quickly than expected, then inflation will start to perk up over time. That has important consequences for monetary policy.
To find out what these are, check out this week’s issue of The Edge Singapore (Issue 798, week of Sept 22) which is on sale now.
