The Monetary Authority of Singapore has reacted strongly to a media article which claimed that Singapore was on the verge of an “Icelandic-style meltdown.”
In a statement to the media, MAS said Singapore is not facing a credit bubble that puts the country or the banking system at any risk of crisis, adding: “Serious observers and investors are not in doubt about the country’s financial health.”
The article, which was published by respected business magazine and website Forbes and was widely shared on social media channels, suggested “Low interest rates are helping to inflate a credit bubble in numerous sectors of the Singaporean economy, but the country’s household debt bubble is particularly alarming.
“Singapore’s ratio of household debt to gross domestic product recently hit approximately 75 percent, which is up from 55 percent in 2010 and 45 percent in 2005.
“Singapore’s household debt has risen by 41 percent since 2010, while household income has increased by only 25 percent and wages by a paltry 15 percent in comparison”
The five-page online article also claimed that Singapore’s household debt to GDP ratio is one of the highest in Asia.
MAS said that “it is clear that unusually low global interest rates have stimulated credit growth and an increase in property prices in recent years, in Singapore and some other economies that had recovered from the global crisis. That is why the government and MAS have taken decisive steps to cool property demand and prevent excessive leverage.”
The Forbes writer Jesse Colombo who focuses his writing on bubble economies around the world, admitted he’d yet to visit Singapore. He is widely recognised as being one of the first journalists to write about the Global Financial Crisis prior to it happening.
The full Forbes article can be read here: http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/
Source : PropertyGuru – 2014 Jan 16