Singapore trims 2011 growth forecast

Singapore on Friday trimmed its growth outlook for 2011 to 5.0 percent from 5.0-6.0 percent previously and eased monetary policy to boost the economy despite inflation concerns.

The Ministry of Trade and Industry said the economy grew 5.9 percent in the third quarter from a year ago, an improvement from the one percent jump recorded in the previous quarter.

On a quarter-on-quarter annualised basis, economic output rebounded to surge 1.3 percent after contracting 6.3 percent in the April-June period.

The central bank, in its twice-yearly policy statement also released on Friday, announced an easing of monetary policy by allowing the Singapore dollar to appreciate at a weaker pace.

“The outlook for the global economy has deteriorated sharply against the backdrop of increased uncertainty in financial markets,” the Monetary Authority of Singapore (MAS) said in a statement.

“Given the stresses and fragility in the advanced economies, the prospects for growth in Singapores major trading partners have deteriorated.”

The MAS said it “will continue with the policy of a modest and gradual appreciation” of the Singapore dollar in the immediate future, but added that “the slope of the policy band will be reduced”.

Analysts said the comment meant that monetary authorities will allow the Singapore dollar to appreciate at a slower pace than before.

Instead of interest rates, Singapore conducts monetary policy via the local dollar which is traded against a basket of currencies of its major trading partners within an undisclosed band.