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Singapore's macro fundamentals are sound, will weather storms: MAS's Ravi Menon
SINGAPORE'S macro fundamentals are sound, and the city-state will be able to weather challenges.
Ravi Menon, managing director at the Monetary Authority of Singapore (MAS), said on Monday that economic restructuring remained "work-in-progress". Singapore needs to do more to raise productivity growth, he said at the UBS Wealth Insight Conference.
"Singapore will not be immune to the global tightening of financial conditions, volatility in capital flows, and potential stresses in the regional corporate sector."
The country needs to "continue to invest in the future - in skills, in technology, and in infrastructure" to emerge a stronger and more dynamic economy, Mr Menon said.
On the Singapore economy, it is expected to continue on its modest pace of expansion this year, with the gross domestic product (GDP) growth likely to come in the 1-3 per cent range.
Modern services - including finance, business, and information and communications technology (ICT) - will be supported by continued growth in the region and Singapore's growing status as a hub. Trade-oriented industries should benefit from the mild upturn in global and regional electronics.
"In fact, the strong showing in the last quarter of 2016 indicates that the Singapore economy retains the capacity to ride on cyclical upswings in demand for our exports," Mr Menon pointed out.
In November, Singapore's exports jumped 11.5 per cent, helped by a rise in shipments to the European Union and China.
Global growth is more likely to be slightly higher this year compared with the last. Recent improvements in business and consumer sentiments may translate into higher investment and consumption.
A shift in the macro policy mix in the US, away from excessive reliance on monetary policy towards a bigger role for fiscal support, is to be welcomed, Mr Menon said, but warned that there are still considerable uncertainty over the actual policy changes in store.
He added that political uncertainties are on the rise, especially in the EU, which has to contend with "Brexit" negotiations and elections in France and Germany.