The economic growth of Singapore experienced a slow fourth quarter due to factories losing traction in the market. However, the recovery of the service sector has boosted bets on the central bank, expecting the tightening of monetary policies as soon as April, causing the local currency to climb higher.
According to estimates by the Ministry of Trade and Industry on Tuesday, on the months of October to December, the economy grew 3.1 percent from the previous year losing traction from the third quarter’s 5.4 percent growth which was considered to be the fastest growth in about four years.
On a yearly and seasonal basis, domestic product grew 2.8 percent, falling behind from the revised growth of 9.4 percent in the third quarter.
Growth is seen in the services sector which caused boosted expectations for monetary policy tightening by the Monetary Authority of Singapore in the year 2018 despite the low quarter on quarter growth figure.
The robust views on central bank policies aided the increase of Singapore dollar SGD=D3 to rise as high as S$1.3331 per U.S. dollar as of 03322 GMT, seen as the highest level since the month of June 2016.
The local currency was boosted by the widely weaker U.S. dollar and was up approximately 0.3 percent on the day at S$1.3335.
For the rest of the year 2017, the city’s state trade reliant economy increased 3.5 percent, reaching the top of the government’s official estimates of 3.0 to 3.5 percent.
The government has stated that a growth expectation of 1.5 to 3.5 percent in the year 2018.