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Moody's projects Singapore real GDP growth for full year at 2.5%

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The Moody's Investors Service Inc. logo is displayed outside of the company's headquarters in New York, U.S..

FOLLOWING an economic expansion of 2.7 per cent year on year in the first half of 2017, Moody's projects real GDP (gross domestic product) growth for the full year at 2.5 per cent, the midpoint of the government's forecast of 2-3 per cent. It believes that external demand will continue to support expansion.

"Over the longer term, Singapore faces similar structural challenges to other high-income economies, including an ageing population and consequently larger expenditure outlays over the long term. A track record of fiscal prudence and large fiscal buffers in the country's sovereign wealth funds provide significant flexibility," it said.

Singapore's "Aaa stable" credit profile reflects the city state's very high per-capita income, diverse and competitive economy, strong fiscal metrics, and robust institutions, Moody's said on Thursday.

"Singapore currently benefits from the cyclical pickup in external demand, but domestic demand remains muted. In response, the government has implemented targeted assistance to households and other sectors, while adhering to its prudent fiscal framework that prohibits financing deficits through debt.

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"Ongoing economic restructuring - which intends to shift Singapore away from a historic reliance on the inflow of foreign labour, while concurrently increasing labour productivity - also contributes to lower, albeit less volatile, growth," it said.

It added that Singapore's susceptibility to event risk is "very low", reflecting the country's strong external buffers, relatively sound banking system and stable political environment.