Singapore Grows Slowly, Central Bank Eases Policy
SINGAPORE--Singapore's central bank Friday eased monetary policy for the first time in two years, as a worsening global economic outlook threatens to derail the island nation's export-dependant economy.</br></br>The Monetary Authority of Singapore will continue to guide the local currency higher but at a slower pace, effectively putting less emphasis on containing inflation and more on supporting the economy, which is facing stiffer head winds from weakening demand in the U.S. and Europe and a slowdown in China.</br></br>The move came as the government reported the economy posted only meager growth in the third quarter, narrowly avoiding a technical recession. The economy grew at annualized pace of 1.3% in the third quarter from the second--better than the 0.7% forecast by economists but a weak bounce from a contraction of 6.3% in the second quarter.</br></br>"The MAS is clearly dovish on growth and it is also slightly dovish on inflation. We barely escaped recession in the third quarter as most of the growth came from the highly volatile biotech sector. The underlying trend is still for softer growth," said Edward Lee, an economist at Standard Chartered Bank.</br></br>Though Friday's data showed more growth than expected in the third quarter, most economists don't plan to revise their full-year estimates. A post-data poll of 10 found the economy is expected to expand 5.1% in 2011. And nine said it's too early to predict what the central bank might do in the next six months as that would depend on events in the U.S. and Europe. One declined to comment.