Singapore, Oct. 11 (BNA): Singapore’s economy will remain on the road to recovery in the third quarter, but the global spread of the delta variant of the coronavirus has clouded the outlook and is likely to push the central bank to stay put.
Reuters reported that 11 out of 13 economists predicted that the Monetary Authority of Singapore would not make any changes to its policy settings on October 14.
Another poll showed that analysts expect the economy to continue to grow, albeit at a more modest pace, in the third quarter.
Preliminary data, also due Thursday, may show the economy grew 6.6% year-on-year, according to an average of 16 forecasts, versus 14.7% in the previous quarter on the effects of a moderately low base and tighter restrictions after a spike in COVID-19 cases.
“We suspect that what has likely held up relatively well is manufacturing and financial services, while some of the more contact-intensive sectors such as retail/wholesale and food/housing are likely to be,” Morgan Stanley economists said in a report last week. more moderate.”
Singapore has fully vaccinated about 83% of its population of 5.45 million people against the virus, but has reimposed some coronavirus restrictions to buy time to prepare to live with the disease.
The trade-dependent economy, which experienced its worst recession ever last year due to the COVID-19 pandemic, is expected to expand 6% to 7% this year. On Saturday, the government said it had opened borders to more countries for travel without quarantine, in a major step toward resuming international links. Read more
Manufacturing has been a key pillar of the country’s growth this year, in part due to the strong performance of the electronics sector.
Singapore’s core inflation rate – the central bank’s preferred rate gauge – hit a two-year high of 1.1% in August, but economists expect prices to remain benign in the short term and gradually rise.
MAS expects core inflation to reach 0-1% this year.
The central bank manages monetary policy through exchange rate settings, rather than interest rates, allowing the domestic dollar to rise or fall against the currencies of its major trading partners within an undisclosed range.
In March 2020, MAS flattened the band’s increase rate to neutral and effectively shifted its position lower, resulting in the largest easing move since the 2009 financial crisis.
Most analysts expect the MAS to remain cautious, seeing no change in the slope, midpoint and width of the policy. But many expect the central bank to appear hawkish to prepare markets for a possible tightening at its next meeting in April 2022.
MI