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Singapore: Economists downgrade 2023 growth forecast to 1.4%, manufacturing set to shrink: survey

  • Jun 14, 2023

PRIVATE-SECTOR economists downgraded their full-year economic growth forecast for Singapore to 1.4 per cent this year in a quarterly survey, following a brief uptick in the previous edition.

Gross domestic product is now expected to be weighed down by a contraction in the manufacturing sector, as well as a deeper slump in non-oil domestic exports, the survey of professional forecasters showed on Wednesday (Jun 14).

However, compared with the previous survey, outlook for the construction as well as accommodation and food services sectors improved.

The survey, conducted by the Monetary Authority of Singapore (MAS), was sent to 26 analysts on May 25, with a response rate of 92.3 per cent. The results do not represent MAS’ views.

In the previous survey, GDP was expected to grow 1.9 per cent in 2023, with manufacturing flatlining.

The GDP downgrade came as growth in the first quarter missed the mark at 0.4 per cent, nearly a percentage point below respondents’ median forecast of 1.3 per cent in the previous survey,

Respondents are now expecting the economy to grow 1.5 per cent in Q2.

Inflation outlook remained the same as in the previous survey, with the median forecast for full-year headline inflation at 5 per cent and that for core inflation, which excludes accommodation and private transport, at 4.1 per cent.

But overall unemployment rate is expected to hit 2.1 per cent this year, a notch below 2.2 per cent in the previous survey.

For Q2, respondents expect headline inflation to come in at 5.2 per cent and core inflation, 4.6 per cent.

Inflation is projected to ease by 2024, with headline at 3.3 per cent and core at 3 per cent. Respondents appear to be more confident that headline inflation will fall within 3 to 3.4 per cent by 2024.

As for risks to Singapore’s economic outlook, the external growth slowdown has now emerged as the most cited downside risk, identified by 61 per cent of respondents. Close to 28 per cent of them consider this the top downside risk.

This was followed by inflationary pressures and an escalation in geopolitical tensions, both of which were the most cited risks in the previous survey.

The main upside risks – China’s reopening, better-than-expected external growth and the tech cycle recovery – remained unchanged from the previous survey.

More robust growth in China, underpinned by economic reopening and macroeconomic policy easing, was the most cited upside risk, with 70.6 per cent of respondents identifying it as such. Nearly 30 per cent of respondents named it the top upside risk, but this was lower than the 56.3 per cent who said it was so in the previous survey.

Source: https://www.businesstimes.com.sg/singapore/economists-downgrade-2023-growth-forecast-14-manufacturing-set-shrink-survey