Singapore Macro Weekly: More Thoughts on Monetary Tightening

Singapore Macro Weekly: More Thoughts on Monetary Tightening - Wei Zheng Kit

Output gap has turned positive with 1Q10 GDP surge, and will likely stay so - Real GDP levels are now about 2.8% above the previous peak in 1Q08, translating into a positive output gap of around 2% of potential output. Our 9% GDP forecast is conservative, as it assumes slight negative or flat sequential growth in 2Q and 3Q, with the output gap still positive. In reality, the boost from the opening of the IRs, and recovery in US consumer demand may see a milder slowdown in 2Q. Double digit full year GDP growth cannot be ruled out.

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