Download Singapore Business Forecast Report Q2 2011 Brochure

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Singapore Business Forecast Report Q2 2011
Description:
External Demand To Buoy Economy In 2011
Advance estimates by the Ministry of Trade and Industry indicate that Singapore’s real GDP expanded by
12.5% year-on-year in Q410, capping a stellar 2010 when economic growth reached 14.7% (the fastest rate in
Asia). Notably, on a seasonally-adjusted annualised (SA ) quarter-on-quarter basis, the economy reversed an
18.9% contraction in Q310 to register growth of 6.9% in Q410. Going forward, we reiterate our recently
upgraded 5.1% real GDP forecast for 2011, which came on the back of an improved outlook in both the US
(real GDP growth raised from 2.8% to 3.1%) and China (real GDP growth raised from 7.5% to 8.3%). On the
domestic front, rising wages and tight employment conditions should also lead to strong private
consumption demand.
Singapore’s ruling People’s Action Party (PAP) will have no problems maintaining its political dominance at
parliamentary elections this year. Indeed, following the continued upturn in economic activity in 2010, the
residential unemployment rate has declined from a cyclical peak of 4.8% in Q309 to 3.1% in Q410,
reinforcing the PAP’s economic mandate.
Meanwhile, we also believe that the government will boost its popularity through an aggressive budget for
FY 2011/12 (April-March) aimed at helping the poor and the middle class.
T he Singapore dollar remains one of our top Asian currency picks for 2011. Currently, we project the SGD to
strengthen to SGD1.2500/ US $ by end-2011 from SGD1.2834/US $ in end-2010, representing currency
appreciation of around 2.6%. Our bullish SGD view is driven primarily by the worrying inflation outlook in the
coming quarters. I ndeed, consumer price inflation has ticked uncomfortably high in recent months,
reaching a 24-month high of 4.6% year-on-year in December 2010 and we expect headline inflation to
average 3.0% in 2011, significantly higher than the long-term average of around 0.5-1.0% in the pre-crisis
years. As such, we believe that the central bank will be inclined to allow further SGD strength to curb
inflation.
Singapore’s fundamentals remain strong. Singapore achieves high marks in the infrastructure, institutions
and market orientation components of BMI’s business environment rating, taking the top position in
emerging Asia with an overall score of 80.8, ahead of rival Hong Kong. Moreover, Singapore’s economy has
showed considerable resilience despite the slowdown in 2009 and has shown signs that it will continue to be
an attractive investment destination. Singapore’s business-friendly policies and open economy place it in a
strong position over the next decade.
Contents:
Executive Summary
External Demand To Buoy Economy In 2011
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Sharing The Spoils From A Record Year
Singapore’s ruling People’s Action Party (PAP) will have no problems maintaining its political dominance at
parliamentary elections this year
Table: Political Overview
Long-Term Political Outlook
Political Liberalisation Likely To Be Slow Over Next Decade
Singapore faces very limited political risks in the near term and we expect the ruling People’s Action Party
(PAP) to retain its monopoly on power
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Economic Momentum To Spill Into 2011
Rising wages, a low unemployment rate and a stronger currency will spur private consumption growth in
Singapore for 2011 table: ECONOMIC ACTIVITY, 2006-2015
Exchange Rate Policy
SGD: A Strengthening Story Continued
Since we put out our view of Singapore dollar outperformance (see our online service, October 8 2010,
‘Regional
FX: Laying Out Our Preferences’), the SGD has appreciated by 1.8% against the US dollar
Table: EXCHANGE RATE , 2006-2015
Investment Climate I
Zero Tolerance For Property Speculation
Property prices will take a breather after the latest round of anti-speculative measures put in place by the
Singapore government on January 14
Investment Climate Il
High Value-Added Industries To Drive Growth
In order to maintain economic growth and to overcome reduced international competitiveness in traditional
manufacturing,
Chapter 3: 10-Year Forecast
The Singaporean Economy To 2020
Solid Growth Trajectory
We are fairly upbeat on Singapore’s longer-term growth prospects to 2020, forecasting a continued recovery
in 2011 with real GDP forecast to expand at an average of 4.1% out to 2020 (from 2011 onwards)
Table: LONG -TERM MACROECONOMIC FORECASTS , 2013-2020
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Investment Climate
Reaching For The Final Frontier
We believe that the space-related industry (R&D and manufacturing) offers considerable opportunity for
Singapore’s economy, noting that the country has a strong business environment and a skilled workforce
Business Environment Outlook
Institutions
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
TABLE: ASIA , ANNUAL FDI INFLOWS
Table: Trade And Investment Ratings
Operational Risk
TABLE: TOP EXPORT DESTINATIONS , 2002-2008
Chapter 5: Key Sectors
Information Technology
Table: Singapore IT Sector – Historical Data & Forecasts (US $mn, Unless Otherwise Stated)
Defence
Table: Singapore's Government Defence Ex penditure, 2008-2015
Chapter 6: BMI Global Assumptions
Global Outlook
Growth Solidifies, But Inflation Poses A Threat
Table: Global Assumptions
TABLE: GLOBAL & REGIONAL REAL GDP GROWTH % CHG Y-O-Y
TABLE: CONSENSUS FORECASTS
Chapter 7: Sector Forecast Appendix
Table: Autos Sector Key Indicators
Table: Food and Drink Sector Key Indicators
Table: Infrastructure Sector Key Indicators
Table: Oil and Gas Sector Key Indicators
Table: pharmaceutical Sector Key Indicators
Table: Telecoms Sector Key Indicators
Table: Defence and Security Sector Key Indicators
Table: Freight Key Indicators
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