Singapore stuck to a policy of allowing gradual gains in its currency even after the economy unexpectedly contracted last quarter, as inflationary pressures curbed scope for monetary stimulus.
Gross domestic product shrank an annualized 1.4 percent in the three months through March 31 from the previous quarter, when it rose 3.3 percent, the Trade Ministry said today. The median of 10 estimates in a Bloomberg News survey was for 1.7 percent expansion. The Monetary Authority of Singapore said it won’t change the slope and width of the currency trading band that it uses as the main policy tool.
Prime Minister Lee Hsien Loong’s move to tighten restrictions on foreign workers and encourage companies to boost productivity has led to a labor shortage and persistent price pressures. At the same time, the Southeast Asian nation’s exports posted the biggest drop since 2009 in February, while industrial production slid the most in at least three years.
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