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Quick takes: Q2 GDP growth could be peak for 2017; neutral monetary policy stance to remain in Oct
SINGAPORE'S government narrowed its growth forecast for the year to 2-3 per cent from 1-3 per cent and kept its monetary policy stance, even as the economy grew faster than expected at 2.9 per cent year on year in the second quarter of 2017, based on the latest data released by the Ministry of Trade and Industry (MTI) on Friday.
Here are some comments from economists:
OCBC Bank economist Selena Ling:
"MAS (Monetary Authority of Singapore) is unlikely to adjust monetary policy settings at October MPS (monetary policy statement). MAS deputy managing director Jacqueline Loh said "the GDP (gross domestic product) forecast range for this year has been narrowed to 2-3 per cent, which is within the planning parameters of the MAS's April 2017 monetary policy decision" and "accordingly, the monetary policy stance remains as announced in April".
"Currently, the monetary policy setting is for a neutral stance for an extended period. Moreover the domestic headline and core inflation prints at 0.7 per cent and 1.5 per cent year on year for H1 2017 are also within the official parameters."
UOB Bank economist Francis Tan:
"The 2.9 per cent year-on-year growth in Q2 2017 could be the peak on-year growth rate for 2017 and that growth rates in the next two quarters will likely be lower, although still higher than 2 per cent year on year.
"With no strong upside to economic growth, and inflationary pressures capped by the weaker labour market conditions, we believe that the MAS will keep the S$NEER on the current neutral appreciation stance in the upcoming October policy meeting."