Singapore's central bank, the Monetary Authority of Singapore (MAS), said on Monday that it will maintain its policy of a modest and gradual appreciation of the Singapore dollar as it expected the city-state's economy to " expand for the rest of 2013 and into 2014."
A separate statement of the advance estimates of Singapore's the third quarter (Q3) economy performance released on Monday by Minidtry of Trade and Industry showed that the city-state's GDP contracted by 1.0 percent in Q3 on a quarter-on-quarter seasonally adjusted annualized basis, following the 16.9 percent surge in previous quarter.
But on year-on-year basis, Singapore's economy expanded by 5.1 percent in the Q3, compared to 4.2 percent in Q2. The advance estimate was higher than the market economists' median forecast of 3.8 percent growth.
The MAS said "the Singapore economy should continue to expand for the rest of 2013 and into 2014, although some volatility in growth rates is likely. There are short term uncertainties in the external environment, and MAS is closely monitoring economic and financial developments."
It added that "barring a significant deterioration in global demand conditions, the labor market will remain tight, and exert further upward pressures on MAS core inflation as firms pass on accumulated costs to consumer prices."
Supported by transport engineering and electronics clusters, the manufacturing sector grew by 4.5 percent on year in Q3, higher than 1.3 percent growth in Q2. But on quarter-on-quarter basis, the sector contracted at an annualized rate of 3.4 percent, a reversal from the 33.5 percent expansion in the preceding quarter.
The construction sector expanded 3.6 percent on year, moderating from 6.9 percent growth in Q2, mainly due to weaker public sector construction activities. The sector contracted 8.8 percent on quarter, a sharp contrast from the 20.9 percent growth in the previous quarter.
The services producing industries grew 5.7 percent on year, similar to the 5.6 percent growth in the preceding quarter. The sector grew 1.0 percent on quarter, moderating from the 12.3 percent expansion in Q2.
The MAS said "the financial services sector shrank as equity and foreign exchange market activities fell on concerns over a reduction in the pace of asset purchases by the Fed and the threat of military intervention in Syria."
The MAS also expects the headline inflation for 2013 at the upper half of the 2-3 percent forecast range. Its core inflation, which excludes private road transport and accommodation costs, is expected to be between 1.5-2 percent in 2013, and rise to 2-3 percent in 2014.