SINGAPORE, March 8 — The skies are brightening, at least for the economy: Singapore’s economy should grow faster next year than this year, while inflation will likely ease this year and drop further in 2024, economists say.

This was the sum of the forecasts in a quarterly survey of private sector economists by the Monetary Authority of Singapore (MAS), published today.

Overall, the economists predict that Singapore’s economy will expand by 1.9 per cent this year, down from the 3.8 per cent expansion in 2022. But it will pick up pace again next year, and is expected to grow by 2.5 per cent then.

Meanwhile, inflation, which stood at 6.1 per cent last year, will likely drop to 5 per cent this year and fall further to 3.1 per cent in 2024.

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Core inflation, which strips out private road transport and accommodation costs, had averaged 4.1 per cent in 2022. It is forecast to remain at 4.1 per cent in 2023 before declining to 2.9 per cent next year, the economists said.

As for the labour market, economists expect the unemployment rate to be 2.2 per cent at year-end. Resident unemployment rate in December last year was at 2.8 per cent.

The survey was sent to 26 economists and analysts who monitor the Singapore economy and 21 responded, MAS said.

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Why it matters

The rosier outlook offers some breathing room in what has been a difficult economic period marked by record high inflation and slowing growth.

Coming out of the pandemic, Singapore’s economy was almost immediately hit by the effects of the Russian invasion of Ukraine, which has led to higher commodity and food prices around the world.

Meanwhile, a global slowdown in consumer demand has slammed a slew of multi-nationals especially in the technology sector, which have resulted in a series of high-profile retrenchments.

In December last year, the Manpower Ministry reported that more workers were laid off in the third quarter of last year compared to the previous three months, and fewer retrenched workers found another job within six months.

The way ahead

Despite the more optimistic outlook for the economy, economists warned that there are risks to their forecast.

An escalation in geopolitical tensions and continued inflationary pressures could negatively affect the economy and drag down growth.

Singapore could also suffer spillover effects from a slowdown in growth among its trade partners, they added.

But on the flip side, they said more robust growth in China, underpinned by its economic reopening, and a faster recovery in the tech sector could boost Singapore’s economy even more. — TODAY