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Singapore Downgrades Growth Prospects as Price Pressures Rise

Singapore’s economy will grow at below-potential levels for a second year in 2013 even as a tight labor market and rising costs of goods and services add to inflationary pressures, the central bank said.

The island’s pace of growth “slowed discernibly” in the past two quarters, and external demand is expected to remain “tepid and volatile” next year, the Monetary Authority of Singapore said in a twice-yearly review today. Gross domestic product may increase 1.5 percent to 2.5 percent this year, it said, reiterating a previous forecast. It didn’t give a prediction for 2013 growth.

“While the global economy should be relatively less volatile next year, its growth momentum is unlikely to pick up significantly as the deleveraging process in the advanced economies will be protracted,” the monetary authority said. “As such, Singapore could see its second consecutive year of below-potential growth in 2013.”

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