Singapore expects lower economic growth in 1995

Singapore expects lower economic growth in 1995

SINGAPORE (AFP): Singapore's economic growth is expected to
moderate to seven-to-eight percent in 1995, lower than that
projected by the government, the Monetary Authority of Singapore
(MAS) said yesterday.

The forecast by the de facto central bank was about half a
percentage point lower than the projection by the ministry of
trade and industry, which had estimated gross domestic product
growth at 7.5-to-8.5 percent.

An MAS spokesman said the authority's estimate in its latest
annual report was based on economic indicators that had become
available in the weeks following the ministry's projection in
mid-May.

He said the MAS also took into account slower growth in both
the United States and Japan.

The MAS's forecast, however, was an upward revision of its own
previous estimate of six-to-seven percent growth.

The higher estimate reflected a greater intake of foreign
workers by the labor-short island state following a relaxation of
worker quotas in December.

A growth rate of seven-to-eight percent was sustainable over
the next five years, the MAS spokesman said.

Singapore's GDP growth was estimated at 10.1 percent in 1994,
above the official forecast range of six-to-eight percent at the
start of the year.

The more favorable outcome reflected stronger-than-expected
global electronics demand.

Economists have welcomed the slower growth this year as a
dampener on prospects of overheating, saying the rapid double-
digit expansion in the past two years had pushed up wage
pressures, stretched production capacities and exacerbated the
tightness of the labor market.

The moderation of growth this year was attributed to a
dampening of US growth following the Federal Reserve's monetary
tightening since early 1994 and other major markets.

Japan's recovery is likely to falter as the surge in the yen
this year reduces its export growth and propels Japanese
manufacturers to relocate to lower-cost locations, the MAS annual
report said.

Growth in the European economies would moderate slightly, with
German export competitiveness eroded somewhat by the mark's
appreciation, the report said.

Despite the slowdown in Singapore's major markets, the
island's economic growth will again be led by external demand,
the MAS said.

"Non-oil domestic export growth should remain strong at 10-to-
15 percent in 1995, although decelerating from the 23 percent
rate in 1994," it said.