Sep 11, 2014

    Outlook for Singapore's economy less rosy

    FORECASTERS are less optimistic about the Singapore economy than they were three months ago, according to the latest quarterly survey by Singapore's central bank.

    The 22 private-sector economists and analysts who responded to the Monetary Authority of Singapore's (MAS') survey last month expect the Republic's gross domestic product (GDP) to expand 3.3 per cent this year. This is lower than the 3.8 per cent median forecast in the June edition of the survey.

    The slip was due to softer growth expectations for all sectors within the Singapore economy, except for the finance and insurance segment, where growth projections have been kept intact.

    This year's lower median growth forecast of 3.3 per cent now falls within the Government's forecast range of 2.5 to 3.5 per cent.

    Non-oil domestic exports are projected to contract 1.1 per cent, in stark contrast to June's expectations of 4.1 per cent growth. The sharp pull-back in sentiment follows year-on-year contractions in both June and July, which came after the first and second quarters' already-dismal showings.

    Forecasters have lowered their inflation projections for this year from a quarter ago.

    Their full-year inflation forecast is now 1.8 per cent, versus 2.2 per cent previously.

    MAS core inflation - which strips out accommodation and private transport costs - is expected at 2.2 per cent, also lower than the 2.4 per cent reported in June's survey.

    These projections are within the range of the Government's 1.5 to 2 per cent forecast for headline inflation, and 2 to 3 per cent for core inflation.

    For the third quarter, forecasters expect lower growth of 3.2 per cent. This fell from the previous forecast of 3.5 per cent. Respondents expect GDP growth to reach 3.7 per cent next year, down from the June survey's earlier forecast of 3.9 per cent.

    Headline and core inflation are projected to come in at 2.2 per cent and 2.5 per cent respectively.