Business

Singapore tightens monetary policy, warns on trade tensions

Sunday, April 15, 2018

Print this page Email A Friend!


SINGAPORE (AFP) — Singapore tightened its monetary policy for the first time in six years Friday on expectations of steady growth in 2018, but warned of risks from global trade tensions.

The city-state followed similar moves recently by South Korea and Malaysia to tame inflation as global economies get back on track after the financial crisis.

The Monetary Authority of Singapore (MAS) said it would allow for a slight appreciation in the local dollar, having had a “zero per cent” policy previously.

The last time MAS, the city-state's central bank, tightened monetary policy was in April 2012 after the risks from the eurozone debt crisis eased and US business sentiment improved.

As a small and open economy that imports most of its needs, Singapore uses currency policy rather than interest rates as a tool to tweak the island's economy. It manages the dollar against an undisclosed basket of currencies of its major trading partners and competitors.

The MAS said it expects the economy to “continue on a steady path” this year but flagged increasing trade tensions as a downside risk for the export-driven economy.

“An escalation of the US-China dispute remains possible, and if it occurs, will have significant consequences for global trade,” it said in a statement, referring to threats of tit-for-tat tariffs by the world's top two economies.

“Barring a setback in global trade, growth in the Singapore economy should continue at a broadly steady pace in the quarters ahead.”

In a separate statement, the trade ministry said that based on advance estimates the economy grew 4.3 per cent on-year in the first three months of 2018, up from 3.6 per cent in October-December.

The MAS said growth this year should come in slightly above the middle of the 1.5-3.5 per cent forecast range. The economy expanded 3.6 per cent last year.

“The measured adjustment to the policy stance takes into account the uncertainty in macroeconomic outcomes presented by ongoing trade tensions,” United Overseas Bank said in a note.

“The economy is certainly on a firmer footing now and inflation has started to edge up, albeit from a low base,” research firm Capital Economics said.

The Straits Times Index was up 1.04 per cent in late trade Friday.

ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT