The Singapore economy will likely see a four to six percent growth in 2011 but the outlook for the world economy is still mixed, said Heng Swee Keat, Managing Director of Monetary Authority of Singapore (MAS).
Financial markets will likely be volatile in the coming months, as reflected by the uneven pace of recovery in different parts of the world and the associated flows of capital looking for higher investment returns.
“We need to be prepared to manage this volatility,” said Mr. Heng in his acceptance speech, as he received Central Bank Governor of Year in Asia Pacific award from The Banker magazine.
The MAS’ move to boost the Singapore dollar in October to fight inflation was appropriate, he said, adding that there was no need for further action ahead of its next monetary policy statement in April.
“The stance that we’ve taken since October last year is appropriate,” he said. “At this stage, we see no need to change our announcement.”
Based on figures released on 24 January, inflation accelerated in December to its fastest pace in two years, fuelling expectations that MAS could act to further dampen price hikes this year. Consumer prices climbed 4.6 percent over the year to December, attributed to higher prices for housing, food and transport.
Second Finance Minister Lim Hwee Hua recently said that MAS would further strengthen the Singapore dollar to control the effect of price inflation on Singapore residents.
A stronger Singapore dollar helps to rein in inflation by making imports cheaper. It also eases domestic inflation pressures by making exports less competitive in the short term, thus slowing the increases in wages and other business costs, and reducing demand for workers.