Singapore Economy Probably Expanded a Second Quarter

By Shamim Adam

Oct. 9 (Bloomberg) -- Singapore’s economy probably expanded for a second consecutive quarter as the global recession eased, adding to evidence of a regional recovery that has prompted policy makers to consider ending stimulus measures.

Gross domestic product rose an annualized 14.5 percent last quarter from the previous three months, after climbing 20.7 percent between April and June, according to the median estimate of 15 economists surveyed by Bloomberg News. The trade ministry will release the data at 8 a.m. on Oct. 12.

Singapore’s benchmark stock index has surged 51 percent this year and property prices have climbed as the nation emerges from its worst recession since independence in 1965. The central bank is forecast by economists to delay any change in its currency policy until April, while the government is due to say next week if it will keep paying companies to retain workers.

“As the recovery in the economy and property market continues, the risk of sector-specific tightening measures or removal of accommodation is growing,” said Edward Teather, an economist at UBS AG in Singapore. “The debate on stimulus withdrawal is likely to hot up.”

Asia is leading the world’s recovery from its deepest recession since the Great Depression after policy makers slashed interest rates to unprecedented lows and governments announced more than $950 billion of stimulus measures. The International Monetary Fund predicts gross domestic product in developing Asia will expand at more than twice the pace of advanced economies next year.

Australia’s Move

Australia this week became the first among the Group of 20 nations to raise borrowing costs since the height of the global financial crisis. Bank of Korea Governor Lee Seong Tae said last month he may raise borrowing costs to stem rising property prices in an economy that expanded at the fastest pace in almost six years in the second quarter.

The Singapore government predicts the economy will shrink 4 percent to 6 percent in 2009. Economists at UBS, Goldman Sachs Group Inc. and DBS Group Holdings Ltd. are more optimistic, with estimates that exceed the government’s expectations. UBS forecasts a 1.5 percent decline this year, while Goldman Sachs expects a contraction of 1.8 percent.

Singapore’s $182 billion economy expanded 0.5 percent in the three months ended September from a year earlier, growing for the first time in a year, according to a Bloomberg survey of 16 economists.

Pharmaceuticals

Industrial output climbed in the first two months of last quarter, and the island’s exports fell the least in almost a year in August, helped by gains in pharmaceutical shipments. Manufacturing accounts for about a quarter of the Southeast Asian nation’s economy.

The island’s private residential property prices rose last quarter for the first time in more than a year. The government said last month it would introduce new measures to prevent excessive price swings in the property market following signs that speculative home buying may be on the rise.

The central bank isn’t likely to be in a hurry to change its currency stance in its twice-yearly policy review to be released Oct. 12, a Bloomberg survey of 12 economists showed.

The Monetary Authority of Singapore in April adjusted the trading range for the island’s dollar against an undisclosed trade-weighted basket of currencies, a move that economists say was a de facto devaluation of the currency. It may next shift the policy stance in April, analysts say.

“To curb the risks of asset-price inflation, the government has already introduced some property cooling measures, rather than necessitating a monetary policy response,” said Enoch Fung, an economist at Goldman Sachs in Hong Kong. “We believe the MAS can afford to wait until April 2010 in order to have better visibility on the global growth outlook.”

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net