Singapore’s economy grew more strongly than expected in the first quarter, helped by a recovery in manufacturing, but the government warned of risks from asset price bubbles in Asia and the fallout from Europe’s debt crisis.
Officials said today the strong rebound from its worst-ever recession last year will be helped by a broad-based recovery in the United States and buoyant growth in large Asian economies such as China.
“The data from Singapore and around the region underscore that so far, the rebound in exports and production has been much better than what people have been expecting,” said David Cohen of Action Economics.
Cohen predicts the economy could grow up to 10 per cent this year, above the government’s forecast of 7-9 per cent and notwithstanding the risks from the debt troubles in Europe.
Gross domestic product grew 38.6 per cent from the fourth quarter on a seasonally adjusted and annualised basis, above an initial estimate of 32.1 per cent and market consensus of 33.2 per cent. From a year ago, the economy expanded by 15.5 per cent, the highest quarterly growth on record.
Singapore’s economy shrank by 1.3 per cent last year, revised data shows after a previously reported contraction of 2 per cent.
Data also released today showed that Japan’s economy grew 1.2 per cent in the first quarter, the biggest expansion in three quarters, on stimulus-driven consumption and solid exports to Asia.
Singapore officials today warned of risks from market anxiety over a possible sovereign debt default in Europe and excessive asset price inflation in many parts of Asia.
Singapore private home prices rose 5.6 per cent in the first quarter from the last three months of 2009 despite government policies such as higher down payment requirements for mortgages.
Ong Chong Tee, deputy managing director at the Monetary Authority of Singapore, the city-state’s central bank, indicated the government will use administrative rather than broad measures to curb runaway property prices.
“It is much better not to use monetary policy, which is a blunt instrument, but to use much more targeted, preventive, administrative or even fiscal measures to address this,” he said.