S'pore economy expected to do well this year

THE local economy is on a growth trajectory that should pay healthy dividends for investors this year, according to a Citibank economist.

At a press conference yesterday, Mr Shrikant Bhat outlined the factors that are creating the ideal climate for expansion - a global recovery, the integrated resorts, inventory restocking and fiscal and monetary policies that encourage business activity.

Mr Bhat, who heads the bank's wealth management unit, pointed out that good retail sales mean 'inventory levels are at a global and cyclical low'.

As a trade hub, Singapore is likely to benefit from 'restocking, which is expected to continue into quarter two this year', he added.

The momentum should allow the Straits Times Index (STI) to peak in the first half of the year with liquidity continuing to boost the market.

Mr Bhat said he has clients who 'have not fully invested the cash they accumulated in the first half of last year'.

He tips the STI to peak this quarter before a slump in the second half as central banks sober the markets up, but the local bourse should have clawed its way back to 3,250 points by the end of the year.

'Going into the (second quarter), the loose monetary stance we have maintained will start getting moderate. The (Monetary Authority of Singapore) will look to tighten the (exchange rate) band to moderate this growth,' he said.

Mr Bhat estimates there will be a 3 to 5 per cent tightening with a similar appreciation in the Singdollar against the greenback.

He also sees growth from the integrated resorts (IR). Mr Bhat said the 15 to 20 per cent increase in tourist arrivals they will bring will generate a 'roughly 0.5 per cent - 1 per cent growth in GDP' through an increase in demand for services.

Citi expects between 30,000 and 40,000 jobs to be added in the first quarter, mainly in sectors benefiting from the IRs and 10 per cent year-on-year GDP growth in the same quarter.

Over the year, Mr Bhat tips that '150,000 jobs will be added to Singaporean economy'.

He likes the banking, offshore marine and healthcare sectors.

Source: Straits Times, 10 Jan 2010