Singapore’s central bank yesterday left monetary policy unchanged after the economy contracted in the first quarter, saying the neutral stance is appropriate for an extended period of time.
Trade-reliant Singapore lost some of its momentum in the first quarter, contracting an annualized 1.9 percent from the previous three months, preliminary data from the government showed.
While the economy is benefiting from a pick-up in exports, domestic-focused industries, such as retail and construction, remain weak, giving the central bank room to keep its policy neutral.
Photo: EPA
The Monetary Authority of Singapore (MAS), which uses the exchange rate as its main policy tool, shifted to a zero appreciation stance for the currency in April last year.
Investors had been looking for clues that the central bank may shift to a tightening stance at its next meeting in October amid an improving global economy.
The bank indicated it was not in a rush to do so, saying “a neutral policy stance is appropriate for an extended period and should ensure medium-term price stability.”
“Those hoping for a hawkish hint for October are likely to be disappointed by the retention of the MAS view,” said Sean Callow, senior strategist at Westpac Banking Corp in Sydney.
The trade-weighted Singapore dollar “might drift back towards the center of the band but there’s no need for a sharp reaction near term,” Callow said.
The MAS guides the local dollar against a basket of its counterparts and adjusts the pace of its appreciation or depreciation by changing the slope, width and center of a currency band. It does not disclose details on the basket, the band, or the pace of appreciation or depreciation.
GDP figures are often volatile in Singapore.
Manufacturing contracted an annualized 6.6 percent in the first quarter from the previous three months, when it surged almost 40 percent.
The services industry, which makes up about two-thirds of the economy, fell 2.2 percent.
Compared with a year ago, GDP rose 2.5 percent in the first quarter, slightly lower than the 2.6 percent median estimate in a Bloomberg survey.
“Despite the pullback in the first quarter, the underlying momentum in the economy remains intact, with output of electronics and its related services segments still at healthy levels,” the MAS said, sticking to its forecast for growth of between 1 percent and 3 percent for this year.
The central bank also kept its inflation forecast unchanged at 0.5 percent to 1.5 percent for this year.
Domestic sources of inflation are “relatively muted” because conditions in the labor market remain weak, curbing wage pressures, the MAS said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day