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Singapore: Analysts raise inflation forecasts; geopolitical risks return amid Ukraine war: MAS poll
PRIVATE-SECTOR analysts stood pat on Singapore’s growth outlook for 2022 but hiked their inflation forecasts, according to the latest quarterly survey published by the Monetary Authority of Singapore (MAS) on Wednesday (Mar 9).
The spectre of higher inflation, driven mainly by energy and food prices, was almost unanimously cited as a risk to the economy by the survey respondents – and was the foremost risk for 38.9 per cent.
The war in Ukraine, which was invaded by Russia late last month, has also resurfaced geopolitical tensions as a concern for economists.
Headline inflation is now tipped to hit 3.6 per cent for the full year, against 2.1 per cent in the last poll. Core inflation, which excludes private transport and accommodation costs, was pegged at 2.7 per cent, from 1.8 per cent before.
Still, gross domestic product (GDP) is expected to grow by 4 per cent in 2022, unchanged from a projection 3 months before. The official forecast is for expansion of 3 per cent to 5 per cent.
Singapore’s GDP growth is expected to cool to 3 per cent in 2023, while both all-items and core inflation are projected to retreat to 2.4 per cent.
That’s even as a sharper-than-expected rise in inflation – which would prompt faster monetary tightening by major central banks – was named a downside risk to the Singapore economy by 94.4 per cent of poll respondents, up from 55.6 per cent in December 2021.
Meanwhile, 70 per cent of respondents identified tightening in global financial conditions as a downside driver of Singapore financial market and lending conditions, while 30 per cent cited inflation.
A potential escalation in geopolitical tensions was also flagged as an economic risk by 55.6 per cent of respondents, and as a financial-market risk by 50 per cent – compared with nil previously.
In particular, “respondents were concerned about downside risks from geopolitical tensions associated with the Russia-Ukraine conflict”, the MAS noted in its report.
Concerns over a deterioration in the Covid-19 situation eased, with 50 per cent of respondents worried about the risk to the economy – down from 83.3 per cent before.
Analysts were also more upbeat on potential uplift from more robust growth in China. The share of respondents who cited China as an upside economic risk rose to 29.4 per cent, from 5.6 per cent earlier, while 33.3 per cent said China was an upside driver for financial markets, against 30 per cent before.
The survey reflects the views of 23 professional forecasters, and not the MAS’s own. The survey was sent out on Feb 17, 2022, and all the responses came in after the war in Ukraine broke out on Feb 24.
Source: https://www.businesstimes.com.sg/government-economy/analysts-raise-inflation-forecasts-geopolitical-risks-return-amid-ukraine-war-mas