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Solid Singapore growth lays ground for possible tax

Solid Singapore growth lays ground for possible tax

SINGAPORE: Singapore’s economy finished 2017 on a solid footing, allowing more room for policymakers as they consider raising taxes and tightening monetary policy this year. Growth was faster than economists predicted last quarter, resulting in the strongest full-year expansion in three years, according to preliminary figures released on Tuesday. The data also confirmed the recovery is broadening out, with services industries, such as finance and transport, among the main drivers of growth in the fourth quarter. The solid data are giving credence to economist forecasts for higher taxes when the government releases its budget on Feb 19, with one option being an increase in the goods and services tax. The Monetary Authority of Singapore (MAS) may also shift to a tightening stance after opening the door to a possible move in its October policy meeting. Singapore, among Asia’s most export-reliant economies, has benefited from a global trade recovery that’s boosted demand for its electronics goods. The government and the central bank forecast GDP growth of 1.5 to 3.5% this year.A stabilising labour market and recharged property market is setting up a “much more stable environment” in 2018, said Edward Lee, chief economist for Southeast Asia at Standard Chartered Plc in Singapore. The services sector, which accounts for about two-thirds of the economy, grew 7.5% in the fourth quarter from the prior three months, while manufacturing contracted 11.5% and construction fell 3.6%. “We hope to see continued improvement in services growth momentum,” said Irvin Seah, an economist at DBS Group Holdings Ltd, Singapore’s biggest lender.