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Growth 'won't be hit' by recent world events
Forecast for Singapore remains unchanged at 4% to 6%, says minister
By Aaron Low, Economics Correspondent
THE events in Japan are unlikely to have a major impact on Singapore's economy this year as long as its industrial activities are not disrupted for a long period, said Trade and Industry Minister Lim Hng Kiang yesterday.
Likewise, while the events in the Arab world have led to a spike in oil prices recently, the overall impact on world economic growth is likely to be small, he added. Part of the reason is that the worst-affected countries, such as Libya and Bahrain, are not key oil exporters.
As such, the Ministry of Trade and Industry's growth forecast for Singapore's economy will not change from the current 4 per cent to 6 per cent range, he said.
Mr Lim was replying to Madam Halimah Yacob (Jurong GRC) and Nominated MP Teo Siong Seng, who had asked about the impact of these events on Singapore.
He said there is a great deal of uncertainty over the events in both Japan and the Arab world, as they continue to be dynamic and fluid.
In Japan's case, the devastating earthquake on March 11, which also resulted in a tsunami and nuclear crisis, is its worst disaster since World War II, with almost 28,000 people missing or dead, while industries have been hit hard.
It is a key trading partner of Singapore, accounting for around 6 per cent of the Republic's international trade, noted Mr Lim. The Japan disaster could result in short-term impacts on manufacturing and trade activities in the region, but much will depend on how prolonged the disruption to industrial activities in Japan turns out to be, he said.
But he added: 'At this juncture, we do not expect significant impact on our supply chain. Less than 10 per cent of our electronics imports - mainly components and parts - are from Japan.'
Feedback from engineering firms also shows they have enough inventory buffers to tide them over any supply disruptions for a few months, he said: 'If Japan can resolve its nuclear power plant problems and factory production resumes in the near term, any negative impact on the supply chain will likely be transitory.'
For the services sector, Japanese tourists formed about 5 per cent of the total number of visitors to Singapore last year.
'A slowdown in tourism flows from Japan would thus affect our tourism-related industries,' he said.
Preliminary assessments, however, show the impact is unlikely to be large, he noted.
He also addressed concerns about the political unrest in the Middle East and North Africa, especially since oil prices have been rising in recent weeks.
The benchmark Brent crude oil has soared in the past two weeks over worries of a supply cut in oil-exporting Libya, reaching nearly US$127 per barrel, the highest since 2008.
But Mr Lim said yesterday that the unrest 'has not significantly affected global oil supply as the worst-affected countries such as Libya and Bahrain are not key exporters of oil'.
He added: 'Moreover, some members of the Organisation of the Petroleum Exporting Countries (Opec) like Saudi Arabia have made commitments to increase oil production to cope with any supply disruptions in the region.
'As such, although the recent increase in oil prices is likely to have affected global economic activities to some extent, the impact has been small.'
If the situations in Japan and the Arab world do not deteriorate further, Mr Lim said Singapore's economic outlook is positive. Citing industrial production and exports, he noted that they are pointing to growth continuing at a healthy pace.
'There are also signs the recovery in the advanced economies is gaining momentum, as indicated by recent improvements in the US labour market,' he said.
Economists interviewed agree with Mr Lim's prognosis of the economy.
Bank of America Merrill Lynch economist Chua Hak Bin expects the impact of the Japanese fallout to be limited and short-lived.
'But I would caution that if oil prices hit US$140 a barrel, there could be significant impact on world growth, which then could hit Singapore,' he said.
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POSITIVE SIGNS
'There are also signs the recovery in the advanced economies is gaining momentum, as indicated by recent improvements in the US labour market.'
Mr Lim Hng Kiang
Forecast for Singapore remains unchanged at 4% to 6%, says minister
By Aaron Low, Economics Correspondent
THE events in Japan are unlikely to have a major impact on Singapore's economy this year as long as its industrial activities are not disrupted for a long period, said Trade and Industry Minister Lim Hng Kiang yesterday.
Likewise, while the events in the Arab world have led to a spike in oil prices recently, the overall impact on world economic growth is likely to be small, he added. Part of the reason is that the worst-affected countries, such as Libya and Bahrain, are not key oil exporters.
As such, the Ministry of Trade and Industry's growth forecast for Singapore's economy will not change from the current 4 per cent to 6 per cent range, he said.
Mr Lim was replying to Madam Halimah Yacob (Jurong GRC) and Nominated MP Teo Siong Seng, who had asked about the impact of these events on Singapore.
He said there is a great deal of uncertainty over the events in both Japan and the Arab world, as they continue to be dynamic and fluid.
In Japan's case, the devastating earthquake on March 11, which also resulted in a tsunami and nuclear crisis, is its worst disaster since World War II, with almost 28,000 people missing or dead, while industries have been hit hard.
It is a key trading partner of Singapore, accounting for around 6 per cent of the Republic's international trade, noted Mr Lim. The Japan disaster could result in short-term impacts on manufacturing and trade activities in the region, but much will depend on how prolonged the disruption to industrial activities in Japan turns out to be, he said.
But he added: 'At this juncture, we do not expect significant impact on our supply chain. Less than 10 per cent of our electronics imports - mainly components and parts - are from Japan.'
Feedback from engineering firms also shows they have enough inventory buffers to tide them over any supply disruptions for a few months, he said: 'If Japan can resolve its nuclear power plant problems and factory production resumes in the near term, any negative impact on the supply chain will likely be transitory.'
For the services sector, Japanese tourists formed about 5 per cent of the total number of visitors to Singapore last year.
'A slowdown in tourism flows from Japan would thus affect our tourism-related industries,' he said.
Preliminary assessments, however, show the impact is unlikely to be large, he noted.
He also addressed concerns about the political unrest in the Middle East and North Africa, especially since oil prices have been rising in recent weeks.
The benchmark Brent crude oil has soared in the past two weeks over worries of a supply cut in oil-exporting Libya, reaching nearly US$127 per barrel, the highest since 2008.
But Mr Lim said yesterday that the unrest 'has not significantly affected global oil supply as the worst-affected countries such as Libya and Bahrain are not key exporters of oil'.
He added: 'Moreover, some members of the Organisation of the Petroleum Exporting Countries (Opec) like Saudi Arabia have made commitments to increase oil production to cope with any supply disruptions in the region.
'As such, although the recent increase in oil prices is likely to have affected global economic activities to some extent, the impact has been small.'
If the situations in Japan and the Arab world do not deteriorate further, Mr Lim said Singapore's economic outlook is positive. Citing industrial production and exports, he noted that they are pointing to growth continuing at a healthy pace.
'There are also signs the recovery in the advanced economies is gaining momentum, as indicated by recent improvements in the US labour market,' he said.
Economists interviewed agree with Mr Lim's prognosis of the economy.
Bank of America Merrill Lynch economist Chua Hak Bin expects the impact of the Japanese fallout to be limited and short-lived.
'But I would caution that if oil prices hit US$140 a barrel, there could be significant impact on world growth, which then could hit Singapore,' he said.
[email protected]
POSITIVE SIGNS
'There are also signs the recovery in the advanced economies is gaining momentum, as indicated by recent improvements in the US labour market.'
Mr Lim Hng Kiang
