Singapore at 8% growth -- Good news for SE Asian funds
November 28, 2006

The Singapore Ministry of Trade & Industry revised the range for 2006 GDP growth from 6.5-7.5% up to 7.5-8%. The growth range for 2007 will slow to a still healthy 4-6%. This good news was based on better-than-expected 3Q GDP growth of 7.2%, bringing Singapore growth for the first nine months to 8.6%.

The ministry said the robust growth was led by manufacturing and wholesale and retail trade, on strong external demand.

What Singapore's News Means:
Singapore is one of the world’s most prosperous countries.

• It has profited from its location on one of the world’s busiest shipping channels, the Malacca Strait, which lies between Malaysia and Indonesia.
• It has a population of almost 5 million people (mostly Chinese), with the world’s fourth best life expectancy at 82 years. (The U.S. is number 48, at 78 years.)
• It has a GDP per capita at $28,600, which is higher than the EU.
• It's relatively small overall GDP at $126 billion means there is plenty of room for economic growth. (Source: CIA World Factbook, 2005 figures)

Other than its port location, Singapore has few natural resources. Therefore, it depends on the high education level of its people to produce high tech and and consumer electronic exports. In 2005, 11% of its exports were to the U.S. Singapore has expanded exports to the rest of Southeast Asia, all of which are expected to maintain moderate growth.

Singapore has low inflation, low levels of government corruption, and high government spending to stimulate the economy -- all of which provide a solid foundation for future economic growth. Furthermore, the Singapore government has promised to support the Singapore dollar relative to the U.S. dollar, which will control inflation and contribute to the growth of the nascent bond market.

Action Steps:
As usual, investment in a good Southeast Asian mutual fund is a safer way to take advantage of Singapore’s growth than a country specific investment. Make sure the fund has Singapore’s primary SE Asian trading partners: Malaysia, Indonesia, Hong Kong, China and Japan

Source: Channel News Asia, “CIA World Factbook, Monetary Authority of Singapore, Keynote Address of Asian Bond Market Summit, November 14, 2006.