SINGAPORE- Economists have downgraded Singapore’s 2023 growth forecasts and inflation expectations, according to a survey by the country’s central bank published on Wednesday, with spillovers from an external growth slowdown cited as the top risk.
The median forecast of 22 economists surveyed by the Monetary Authority of Singapore (MAS) is for Singapore’s economy to grow 1.0 percent this year, down from a forecast of 1.4 percent in June’s survey.
Gross domestic product is projected to expand by 2.5 percent in 2024.
The median inflation forecast is for headline consumer prices to rise 4.7 percent this year, down from 5.0 percent predicted in June. The median forecast for MAS core inflation, which excludes private road transport and accommodation costs, is 4.1 percent , unchanged from the previous survey.
Both headline inflation and MAS core inflation are expected to ease in 2024, to 3.1 percent and 2.8 percent respectively.
The survey was conducted in mid-August, just days after the government slightly cut its economic outlook for 2023 after the country narrowly averted a recession in the second quarter, with weak global demand a key drag on its economy.
About 69 percent of survey respondents cited the impact of a slowdown in external growth as the downside risk to the domestic outlook.
Tighter global financial conditions and rising geopolitical tensions were cited by survey respondents as the main factors that could potentially weigh on financial market and lending conditions in Singapore.
None of the economists is expecting MAS to make any changes to monetary policy in its review next month.
Majority of the respondents expect corporate profitability to decline this year, while more than half see private residential property prices rising.
Singapore slightly cut its economic outlook last month after it narrowly averted a recession in the second quarter, with weak global demand a key drag on its trade-reliant economy.
Goss domestic product (GDP) expanded a seasonally-adjusted 0.1 percent quarter-on-quarter in April to June, slower than 0.3 percent growth seen in the government’s advance estimate. The first quarter contracted 0.4 percent.
Industrial output and exports have fallen for nine straight months, raising the risk of a prolonged downturn, but a trade ministry official told a press conference a technical recession – two consecutive quarters of contraction – was not expected this year.
On an annual basis, the economy expanded 0.5 percent, compared with the advance estimate of 0.7 percent and first quarter growth of 0.4 percent, the Ministry of Trade and Industry (MTI) said in a statement.
Manufacturing will remain weak, dampened by a protracted downturn in electronics, while finance and insurance sectors will likely be subdued, MTI said.
On the bright side, consumer-driven and tourism sectors, stand to benefit from the region’s post-pandemic recovery.
The ministry narrowed its GDP growth forecast to 0.5 percent to 1.5 percent this year from 0.5 percent to 2.5 percent previously. The economy grew 3.6 percent in 2022.
While the slowdown in manufacturing is proving to be “a little bit more protracted” than what the government initially thought, Singapore is expecting a modest recovery in the second half of the year, anchored by inbound tourism and resilience of consumer-facing sectors providing some cushion to growth, Yong Yik Wei, chief economist at MTI, said. -Reuters
