2. 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.
3. 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.
4. 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)
5. 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
6. Exchange Rate in Singapore
Over the long run, the SGD exchange rate has been on an appreciating path, both in nominal
and real terms.
7. 2 basic reasons to explain long-term appreciation in the real
exchange rate:
8. 2 basic reasons to explain
long-term appreciation in the
real exchange rate:
9. 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.
10. 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.
11. 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.
12. 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
13. 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.
14. 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).
15. 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.
