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Singapore’s economic growth is poised to moderate
in 2001 as the external economic environment weakens
with the slowdown in the US economy. The weakness
in global electronics demand would put a damper on
the performance of the domestic manufacturing sector.
Some support is nonetheless expected from the non-electronics
industries, such as the chemicals cluster in the second
half of the year, and marine transport, which would
reap the benefits of increased efficiency from recent
consolidation in the sector. The downturn in manufacturing
activity, coupled with the flagging demand from the
regional economies, is expected to weigh on the services
sectors,especially the transport and commerce sectors.
GDP growth is forecast to come in at between 3.5%
and 5.5% for the year.
Reflecting the less sanguine outlook for the manufacturing
sector, labour demand is expected to ease in 2001.
Growth of nominal earnings would also see some moderation
in view of a slowdown in GDP growth. At the same time,
productivity is expected to record more modest growth
as the economy slows, resulting in a slight rise in
unit labour cost.
Headline CPI inflation moderated to 1.7% in the first
quarter of 2001. It is likely that inflation will
moderate further for the rest of the year, in line
with more cautious consumer sentiments and relatively
benign foreign prices. For the year as a whole, both
CPI and MAS underlying inflation are expected to come
in between the 1.0% to 2.0% range.
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