Country Report Singapore October 2009

Summary

Given that the political opponents of the ruling People's Action Party (PAP) are weak and subject to repression, the PAP is expected to maintain its stranglehold on power and remain the dominant political force in 2010-11.
The government will rely on a policy of fiscal expansion to engineer a sustained recovery in domestic demand in the forecast period. Its reserves are plentiful, enabling it to raise spending.
Owing to the likelihood of a rise in inflationary expectations, monetary policy is expected to be tightened in 2010 through a steady appreciation of the value of the Singapore dollar.
Singapore's economy is forecast to rebound in 2010 from a recession in 2009. The Economist Intelligence Unit estimates that the economy will contract by 4.5% in 2009, which will be its worst-ever performance.
Following a period of deflation in the second half of 2009, consumer prices are expected to increase by an average of 1.9% in 2010-11. This reflects the effect of rising global commodity prices relative to those in 2009.
Stronger domestic demand will lead to a slight deterioration in the trade balance, but Singapore will continue to post significant surpluses on the trade and current accounts in 2010-11.

In September 2009 the prime minister, Lee Hsien Loong, said that the government would take steps to slow the recent rate of immigration to the city state.
Singapore's employers received the third of four payouts under a jobs credit scheme on September 30th. The scheme was announced in January in the budget for fiscal year 2009/10 (April-March).
In a bid to head off speculation in the housing market, in September 2009 the minister for national development, Mah Bow Tan, announced an end to an interest absorption scheme and an interest-only housing loan scheme.
Unemployment stabilised at the end of June. According to the Ministry of Manpower, the overall rate of unemployment among Singaporean citizens, permanent residents and holders of employment passes stood at 3.3%.
Singapore recorded its fifth successive month of year-on-year deflation in August, when consumer prices fell by 0.3%. This brought average inflation in the first eight months of the year to 0.5%.
Singapore's exports continued to show signs of recovery in August, with? non-oil domestic exports increasing by a seasonally adjusted 1.3% month on month.