Inflation could sit at around 4% in 2013: OCBC

As labour market tightens.

According to OCBC, their forecast for 2013 growth remains for a modest improvement to around 2% yoy, with a sluggish first half performance likely to give way to a stronger H2, predicated on a modest global growth rebound, some turnaround in the global electronics industry, as well as the Chinese economic growth regaining the 8% yoy handle this year.

Near-term growth momentum may remain bumpy, especially in the manufacturing and export areas, but there should be some stabilization in the months ahead.

Here's more from OCBC:

Notably, the key NODX markets, namely Taiwan, HK, South Korea, and Indonesia have seen significant improvements. More importantly the services sectors, especially those in the transport and storage, finance and insurance, should see modest improvement, as intra-regional trade and also financial market conditions pick up.

Given the tight labour market, coupled with foreign manpower constraints, wage and income growth should be sustained this year, and this will aid private consumption. Headline inflation will ease slightly from 4.6% yoy last year to around 4% this year, with core inflation also retreating from 2.6% to 2.1% correspondingly.

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