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  • 1. Forecast of BOP in Singapore  21 November 2013. The Ministry of Trade and Industry (MTI) announced  today that it expects the Singapore economy to grow by 3.5 to 4.0 per cent in  2013, and by 2.0 to 4.0 per cent in 2014.  The global economic outlook is expected to continue to improve modestly in  2014, supported by a slow recovery in the US and Eurozone. In Asia, while  the recovery in the advanced economies is expected to lift export demand,  growth is likely to remain moderate given on-going structural reforms in  China and fiscal consolidation in some ASEAN economies.  Against this backdrop, the growth outlook for the Singapore economy remains  modest. Externally-oriented sectors such as manufacturing and transportation  & storage are likely to continue to provide support to growth, in tandem with  the recovery in global demand. However, some labour-intensive domestically- oriented sectors may see their growth weighed down by tightness in labour market conditions.
  • 2. Forecast of BOP in Singapore  There are also risks to the global growth outlook. Uncertainties remain over  how markets will react to the possible tapering of the quantitative easing  programme by the US Federal Reserve, and whether the debt ceiling in the US  will be raised in a timely manner. The Eurozone remains susceptible to a  flare-up of the sovereign debt crisis, while there are risks of a sharper-than expected slowdown in China given on-going policy adjustments to restructure  the economy. Barring these downside risks, the Singapore economy is  expected to grow by 2.0 to 4.0 per cent in 2014.
  • 3. Trends in current account  Singapore recorded a Current Account surplus of 17435.10 SGD Million in the third quarter of 2013. Current Account in Singapore is reported by the Statistics Singapore. Current Account in Singapore averaged 7396.29 SGD Million from 1986 until 2013, reaching an all time high of 21544.80 SGD Million in the third quarter of 2010 and a record low of -662.70 SGD Million in the first quarter of 1987. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid)
  • 4. Trends in Capital account  The Net capital account (BoP; US dollar) in Singapore was last reported at -333331296.11 in 2010, according to a World Bank report published in 2012. Net capital account includes government debt forgiveness, investment grants in cash or in kind by a government entity, and taxes on capital transfers. Also included are migrants' capital transfers and debt forgiveness and investment grants by nongovernmental entities. Data are in current U.S. dollars
  • 5. Exchange Rate in Singapore  Over the long run, the SGD exchange rate has been on an appreciating path, both in nominal and real terms.
  • 6. 2 basic reasons to explain long-term appreciation in the real exchange rate:
  • 7. 2 basic reasons to explain long-term appreciation in the real exchange rate:
  • 8. Forecast of BOP in Malaysia  Current account surplus of the balance of payments (BOP) has improved during the third quarter of 2013, strangely the improvement in the overall BOP position has been attributed mostly to "net errors and omissions", a statistical discrepancy which turned around to register significant surplus, and the figures are the largest since the third quarter of 2011. Without that substantial turnaround, arising from discrepancies due to various data sources and valuation factors, overall balance of BOP could have easily slipped into deficit, as our BOP financial account has deteriorated, especially with significant outflows of portfolio investment during the third quarter of 2013. The reduction in reserve assets has affected domestic liquidity, leading to tighter monetary conditions.The Central Bank expects the current account surplus of the balance of payments to narrow further to RM42.7bn or 4.4% of GNI in 2013, after falling by nearly 40% to a surplus of RM60.0bn or 6.6% of GNI in 2012.
  • 9. Forecast of BOP in Malaysia  After recording a sharp drop in surplus last year, we expect the country’s current account surplus in the balance of  payments to narrow further to RM54.9bn or 5.6% of GNI in 2013, compared with a surplus of RM60.0bn or 6.6% of  GNI in 2012. This is attributed to a smaller surplus in the merchandise trade account, as the implementation of the  various economic programmes will likely lead to higher imports of capital goods during the year. Similarly, repatriations  of salaries and wages by foreign workers are likely to widen slightly in 2013, given the implementation of the minimum  wage policy that would benefit foreign workers as well. These, however, are likely to be mitigated by a smaller deficit in  the services account due to higher net travel receipts, in anticipation of a pick-up in tourist arrivals but offset partially by  higher net payment for transport charges. In the same vein, the deficit in the income account is projected to narrow, as  dividends from profits to be repatriated by non-resident controlled companies are likely to be smaller during the year,  after a surge in the previous year. The smaller current account surplus, however, will likely continue contributing to a  build-up in the country’s foreign exchange reserves and fuel domestic liquidity in the financial system.
  • 10. Forecast of BOP in Malaysia  The current account surplus, albeit smaller, will contribute to a build-up in the country’s foreign exchange reserves and  will continue to provide an underlying support to the ringgit. Notwithstanding a projected pick-up in the foreign exchange  reserves, the ringgit depreciated further by 2.2% against the US dollar in January to 20 March, after falling by 0.6% in  December and compared with a gain of 4.3% in July-November. This was attributed partly to concerns over currency war  in anticipation of more aggressive monetary policy easing to be carried out by Japan, uncertainties over Italy’s  inconclusive election results and Cyprus deposit tax issue as well as the US fiscal policy and its debt limit that could affect  the country’s economic growth. The uncertain general election outcome in Malaysia also contributed to the weakness in  the ringgit. Indeed, the Japanese yen depreciated significantly by 9.6% against the US dollar in January to 20 March,  compared with -4.0% in December  In the near term, we expect the ringgit to be weak and its direction will continue to be determined by flowsof short-term capital, influenced by development in the euro-debt crisis and the US economy. Ringgit is expected to gradually gain strenght , underpinned by sustained large current account surplus in the balance of payments.
  • 11. Trends in current account  Malaysia recorded a Current Account surplus of 9842 Million MYR in the third quarter of 2013. Current Account in Malaysia is reported by the Department of Statistics Malaysia. From 1999 until 2013, Malaysia Current Account averaged 17463.8 Million MYR reaching an all time high of 38598.0 Million MYR in September of 2008 and a record low of 2553.0 Million MYR in June of 2013. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). This page contains - Malaysia Current Account - actual values, historical data, forecast, chart, statistics, economic calendar and news. 2014-01-08
  • 12. Trends in capital account . The Malaysian economy in recent years has been characterized by a trend towards  increased liberalization, greater openness to world trade, a higher degree of financial integration and  greater financial development. The increased liberalization and openness have motivated a high rate of  increase in cross-border capital and direct investment flows2  . Both inflows and outflows of private  capital have been sharply increasing since the early 1980s. Also, foreign direct investment flows to the  country have significantly increased during this period. However, these flows declined in the mid 1990s and during the 1997-98 Asian financial crisis. As a counter-measure, the government introduced  controls on capital outflows in August 1998, including a restriction on access to domestic capitals by  non-residents to prevent foreign reserves from drying up. Although there has been much criticism of  the reintroduction of controls on capital outflows, Malaysia successfully overcame the crisis without  IMF support, defended its currency, which was pegged to the US dollar, against speculative capital  movement, and finally achieved economic recovery.
  • 13. Exchange Rate in Malaysia  While FDI has been increasing, it doesn’t even begin to cover outward investment  the outward flow of investment is due not only to Malaysian firms investing overseas, but also to foreign-owned firms redirecting investment overseas from retained profits generated locally. Even though investment and capital are leaving the country, this is counterbalanced by an increase in future potential earnings from abroad, as well as less pressure to keep reserves high. This also puts upward pressure on the exchange rate.  The ringgit appreciated 3.5 percent against the U.S. dollar last year as foreign investors flocked to Southeast Asian markets , but it has slipped more than 1 percent so far in 2013 on growing political uncertainty ahead of general elections.The Malaysian currency was the second most traded in Southeast Asia after the Singapore dollar in 2010 although it accounted for just 0.3 percent of total global foreign exchange market turnover daily, according to the Bank for International Settlements (BIS).
  • 14. Exchange Rate in Malaysia  Malaysia has a reputation of moving quickly to defend the ringgit. The country slapped on capital controls and pegged the ringgit to 3.80 per dollar during the Asian financial crisis in 1997 and 1998, blaming speculators including George Soros for a 34 percent plunge in the currency then.While Bank Negara removed the dollar peg in 2005, a ban on offshore trading of the ringgit has remained in force ever since the crisis.Analysts said any possible steps towards internationalising ringgit trade was out of the question with the Libor scandals and the news of forex rate-rigging in Singapore. Strong inflows into Southeast Asia has also kept the Malaysian central bank cautious.