SINGAPORE: DBS chief executive officer Piyush Gupta said the property cooling measures unveiled on January 11 have "a lot of teeth".
Speaking at an event for its private banking clients on Monday, Mr Gupta said the measures were a reflection of the government willingness to trade off growth for social harmony and to rein in inflation.
He warned that as a result, the Singapore economy could grow at the lower end of its 1-3 per cent forecast for 2013.
Mr Gerard Teo, head of strategy and currency at Fullerton Fund Management, who was also speaking at the event, said that as the government moves to restructure the economy, the government's foreign worker policy has resulted in a lower supply of foreign workers in Singapore.
He said there is a danger that as wages increase, businesses may try to pass the increased costs to consumers. He reckoned that this could lead to higher inflation.
Mr Gupta said: "I think in Singapore, it's quite clear that the priorities are really caught up in the heart of the dilemma. Growth versus inflation. Growth versus social stability. They've been making it very clear now for some time that they are willing to trade off growth, for what they call "sustainable growth" which means they are willing to trade off growth for inflation and social harmony."
He added: "Friday's actions were just another reminder of that reality. They've been very clear that on a tradeoff basis, they are willing to trade off growth. I suspect in the 1 to 3 per cent call that they made, we might wind off being a tad on the low side than on the high side. I think there may be headwinds.
"I think the actions taken on Friday for the property market have a lot of teeth. That impacted everybody, not only foreigners, PRs, high value, low value, but new HDB buyers as well. Everybody is impacted by these measures. I think there will be some headwinds on account of that."
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