Economists lift Singapore growth forecast slightly to 1.9%

Price pressures: A customer uses an ATM at a bank in Singapore. MAS expects headline inflation to average 5.5% to 6.5% and core inflation, 3.5% to 4.5%, in 2023. — Bloomberg

SINGAPORE: Private sector economists have raised slightly their forecast for Singapore’s economic growth in 2023, with the pace seen accelerating to 2.5% in 2024, according to a Monetary Authority of Singapore (MAS) survey.

Most of the 21 economists and analysts who participated in the quarterly survey believe robust growth in China, underpinned by economic reopening and policy easing, better-than-expected global growth, and a faster technology sector recovery could further boost Singapore’s outlook.

The median forecast for gross domestic product (GDP) growth in the survey, which was conducted in February, came in at 1.9% for the whole of 2023.

This was up from the 1.8% GDP growth projected in the previous survey published last December.

The estimate lands within the top half of the government’s broad forecast range of 0.5% to 2.5% growth for 2023.

The median forecast in the survey for Consumer Price Index-All Items, also called headline inflation, for 2023 was 5%, down from 5.2% in the December survey.

But the forecast for core inflation, which excludes accommodation and private transport costs, was raised a notch to 4.1%, from 4% previously.

MAS expects headline inflation to average 5.5% to 6.5% and core inflation, 3.5% to 4.5%, in 2023.

The respondents to the MAS survey kept their overall unemployment rate at 2.2% for the end of 2023, unchanged from the December survey.

However, 56% of the respondents warned that an escalation in geopolitical tensions and inflationary pressures were the two prominent risks to their forecasts.

Meanwhile, spillovers from an external growth slowdown was also ranked in the survey as the top downside risk, by 31% of respondents.

The median of forecasts for various economic sectors in the survey showed manufacturing would not be able to record an expansion in 2023, finance and insurance would grow by 2.5% and construction would expand by 4.2%.

The wholesale and retail trade sector would likely grow by 1.9%, while accommodation and food services would post growth of 3.2%.

The respondents expect non-oil domestic exports to shrink by 4% in 2023.

For the whole of 2023, 86% of the respondents expect corporate profitability to decline.

At the same time, 57% expect private residential property prices to increase in 2023.

Respondents cited tighter global financial conditions, a stronger US dollar and elevated inflation as the main factors that could potentially weigh on financial markets and lending conditions in Singapore.

However, all respondents identified a slower pace of tightening of global financial conditions, including less aggressive rate hikes by central banks, as an upside driver of domestic financial market and lending conditions.

Respondents also listed capital inflows into Singapore, a weaker trade-weighted Singapore dollar and improved external economic outlook as other potential upside drivers for the market. — The Straits Times/ANN

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survey , Singapore , GDP , forecasts , inflation , unemployment


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