Singapore unemployment rate expected to hit 3.7% by year-end: survey

SINGAPORE’S economy appears on track to shrink 6 per cent in 2020, although unemployment could rise further by year-end, according to private-sector economists polled by the Monetary Authority of Singapore (MAS) in a quarterly survey.

This latest forecast for full-year gross domestic product (GDP) is unchanged from September’s Survey of Professional Forecasters.

However, respondents now believe the manufacturing sector could more significantly lift Singapore’s economy with a 5.8 per cent growth, compared to 2.3 per cent in the previous survey. Meanwhile, construction could suffer deeper setbacks with a 36.2 per cent contraction, down from September’s expectation of a 23 per cent decline.

Predictions improved for wholesale and retail trade, which is expected to shrink by 5 per cent instead of 6.4 per cent, and for accommodation and private consumption, which is expected to decline 27 per cent instead of 29.1 per cent.

On the other hand, finance and insurance is expected to grow 4.6 per cent instead of 4.9 per cent, while non-oil domestic exports could rise 4.2 per cent rather than 4.5 per cent. Private consumption is predicted to shrink 13.4 per cent instead of 11.8 per cent.

Sent out on Nov 23, the survey reflects the views of 23 economists and analysts and does not represent MAS’s views or forecasts.

For the fourth quarter, they are expecting the economy to contract by 4.5 per cent year on year. But GDP is expected to recover by 2021 with a 5.5 per cent growth.

Headline inflation and core inflation are tipped to be -0.3 per cent and -0.2 per cent respectively, which fall within the official forecast of -0.5 to zero per cent. In 2021, however, both are forecast to come in at 0.6 per cent.

Respondents are expecting the unemployment rate to reach 3.7 per cent by December, up from 3.5 per cent in the previous survey.

An escalation of the Covid-19 pandemic remains the top downside risk to Singapore’s growth, with 88.9 per cent of respondents citing this.

Respondents were also concerned about risks due to an earlier-than-expected pullback in macroeconomic policy support globally, resulting in a premature tightening of global financial conditions and weaker demand due to fiscal consolidations. This was identified by 44.4 per cent of respondents, up from 20 per cent in September.

However, the number of respondents who consider an escalation in US-China tensions to be a downside risk has fallen drastically to 27.8 per cent, down from 60 per cent in the previous survey, before the US presidential election was held.