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Singapore: Covid-19 situation depresses analysts despite border reopening hopes: MAS poll
THE prospect of international border reopenings is cause for cheer for private-sector economists, who again bumped up their estimates for this year’s growth recovery.
Still, concerns about the Covid-19 situation weighed more heavily on analysts in the latest quarterly poll conducted by the Monetary Authority of Singapore (MAS), amid other worries such as the manufacturing outlook and Chinese regulatory actions.
The hope of reopening borders to travel was cited as a potential growth driver by 70 per cent of respondents in September, compared with 44.4 per cent in June, according to the survey of professional forecasters that was released on Wednesday.
But the MAS noted that a worsening outbreak and “the associated re-tightening in public health measures” was unanimously identified by all respondents as a downside risk for the Singapore economy in September, compared with 82.4 per cent in June.
Meanwhile, the share of analysts anticipating a positive spillover from effective containment of the coronavirus fell to 55 per cent, from 83.3 per cent before.
At the same time, gloom about manufacturing and trade has risen on the three months prior, as the share of respondents flagging the upside from stronger-than-expected manufacturing output growth fell to 40 per cent, from 61.1 per cent in June.
Some 35 per cent of respondents expressed concern about the risks from supply chain disruptions, which the MAS noted “could constrain manufacturing and trade activity” – rising from 11.8 per cent who held such fears in June.
Also, a slowdown and weaker-than-projected growth in China’s economy emerged as a headache for 30 per cent of respondents – compared with none in June – which the MAS report attributed to factors such as a recent crackdown by regulators there.
Similarly, 25 per cent of respondents indicated that the Chinese regulatory tightening posed a risk to financial and lending market conditions, compared with none before.
That’s despite hope of a market boost from a weaker Singapore dollar nominal effective exchange rate (S$NEER) policy rising to 36.4 per cent, from 30 per cent in June.
Singapore’s economy is now tipped to expand by 6.6 per cent year on year in 2021, slightly above the 6.5 per cent forecast in the previous survey.
On the other hand, respondents have pared their growth projections for 2022 to 3.9 per cent, compared with the estimate of 4 per cent three months prior.
Separately, analysts tipped core inflation – a barometer for S$NEER-based monetary policy – to come in at 0.7 per cent in 2021, against an earlier estimate of 0.8 per cent in June. Core inflation is forecast to then pick up to 1.3 per cent in 2022.
The analysts also expect all-items inflation to hit 1.7 per cent in 2021 – higher than an earlier estimate of 1.4 per cent – before moderating to 1.4 per cent in 2022.
The official MAS projection is for core inflation to average between zero and 1 per cent in 2021, with all-items inflation falling between 1 per cent and 2 per cent.
Meanwhile, respondents kept their year-end unemployment rate forecast unchanged at 2.7 per cent. However, a slower-than-expected labour market recovery – which could weigh on private consumption – was no longer among their top three economic risks.
The latest MAS survey of professional forecasters was sent out on Aug 11 and reflects the views of 24 analysts who closely monitor the Singapore economy. It does not represent the central bank’s own views or forecasts.
Source: https://www.businesstimes.com.sg/government-economy/covid-19-situation-depresses-analysts-despite-border-reopening-hopes-mas-poll