Economists downgrade 2019 growth forecast for Singapore, survey shows

Private sector economists have lowered their economic growth forecast for Singapore in 2019, in line with a similar downgrade in the official forecast. — TODAY pic
Private sector economists have lowered their economic growth forecast for Singapore in 2019, in line with a similar downgrade in the official forecast. — TODAY pic

SINGAPORE, June 13 — Economists in Singapore have become more pessimistic about the city-state’s economic growth in 2019 — but they expect things to pick up slightly next year.

In a June survey of private-sector economists and analysts, a fast-growing number are also worried about the economic risks associated with United States-China trade tensions.

The survey is conducted by the Monetary Authority of Singapore (MAS) every quarter. The results for June’s survey were released yesterday.

The survey respondents, on average, expect Singapore’s gross domestic product (GDP) to increase by 2.1 per cent this year, a slower pace than the 2.5 per cent growth they forecast in the March survey. GDP is a widely used measure of economic output.

On May 21, the Ministry of Trade and Industry downgraded its growth forecast for 2019, with growth expected to come in between 1.5 and 2.5 per cent, compared with the initial forecast of between 1.5 and 3.5 per cent.

GDP growth for the first quarter of 2019 also came in slower than expected at 1.2 per cent, the MAS said. This was markedly lower than the forecast of 1.9 per cent reported in the March MAS survey.

Despite the downgrade in the GDP forecast, economists expect the unemployment rate to remain at 2.2 per cent by the end of this year, unchanged from the previous survey.

Core inflation for 2019 is expected to be 1.4 per cent, down from 1.7 per cent in the March survey.

The biggest risk factor to Singapore’s growth, highlighted by 94 per cent of those surveyed compared to 84 per cent in the March survey, is the escalating global trade protectionism arising out of tensions between the United States and China.

Over 29 per cent of respondents cited a global economic downturn as a potential risk, up significantly from just 5 per cent in the previous survey.

Other risk factors include a slowdown in China’s economy.

Economists also expect Singapore’s economy to pick up in 2020, with GDP growth forecast at 2.3 per cent, unchanged from the previous survey.

United Overseas Bank economist Barnabas Gan and CIMB economist Song Seng Wun said that hope for some resolution over the ongoing trade tensions between the US and China could be one of the reasons for the better growth prospects in 2020.

Song said issues related to trade may have been ramped up ahead of the US presidential elections in 2020, but economists are hoping that these issues will be settled as the election kicks into high gear.

That is however a “big, bold” hope, said Song.

Moreover, Gan pointed out that the uptick next year is “small” and “nothing to shout about.” — TODAY

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