MAS says economic activity likely to remain restrained

GDP growth is expected to come in within the 1-3% range for the whole year.

The Monetary Authority of Singapore noted:

Notwithstanding the strong rebound in domestic economic activity at the start of year, Singapore’s growth prospects for the rest of 2012 are likely to remain modest against a muted external environment. In the advanced economies, public and private sector deleveraging will continue to restrain end demand, which will in turn cap activity in the domestic trade-related sectors.

In Asia, the expected slowdown in China’s growth could potentially affect manufacturing activity in the rest of the region, including Singapore. The persistent inventory overhang in the global semiconductor industry will also have a bearing on the outlook of Singapore’s electronics manufacturing sector.

With trade-related activity, particularly electronics, likely to remain sluggish, Singapore’s GDP growth this year will be driven by domestic and regional-oriented industries instead. Specifically, a strong pipeline of building projects will boost the construction sector and provide support to construction-related lending activities.

Further, the tourism-related industries should continue to grow on the back of firm visitor arrivals from the immediate region. This is unlike previous recoveries, where manufacturing played an important role. Barring a major dislocation in the global economy, the Singapore economy is expected to record 1-3% growth in 2012.