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Economists raise Singapore’s 2017 growth forecast to 2.5%

SINGAPORE — The stronger-than-expected performance of Singapore’s economy in the first quarter of the year, and a recovery in manufacturing, among other factors, have led private-sector economists to upgrade their full-year forecast for this year.

Reuters file photo

Reuters file photo

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SINGAPORE — The stronger-than-expected performance of Singapore’s economy in the first quarter of the year, and a recovery in manufacturing, among other factors, have led private-sector economists to upgrade their full-year forecast for this year.

A quarterly survey of professional forecasters conducted by the Monetary Authority of Singapore (MAS) released on Wednesday (June 14) showed that the 21 respondents project gross domestic product (GDP) to grow by 2.5 per cent this year, up from the previous forecast of 2.3 per cent.

The Singapore economy grew by 2.7 per cent in the first quarter, which was higher than the median forecast of 2.6 per cent reported in the March survey.

For the second quarter, they expect the economy to expand by 2.7 per cent. GDP growth for next year is projected to be 2.5 per cent.

Mr Francis Tan, an economist at UOB, said the upward revision was “not surprising”, given the upside in manufacturing growth that had performed “beyond expectations”. 

He maintains his own full-year forecast for economic growth at 2.4 percent.

“The recent upturn in the global electronics industry had provided a boost to electronic manufacturers, a mainstay of Singapore’s manufacturing sector,” agreed Mr Bernard Aw, an economist at IHS Markit.
In the latest MAS survey, the economists expect manufacturing to expand 5 per cent this year, up from 4.5 per cent.

However, they tamped down this year’s forecast for non-oil domestic exports to 5.6 per cent, from the previous 6.1 per cent. 

The surge in exports in the first quarter, driven by demand for semiconductors, may be “difficult to sustain” and looks to be slowing down, said Mr Tan. 

Trade development agency International Enterprise (IE) Singapore last month raised the Republic’s full-year forecast for export growth, citing the solid performance in the first quarter and improved global economic conditions.

IE Singapore said exports this year are forecast to grow between 4 per cent and 6 per cent, up from the earlier forecast of zero to 2 per cent.

Projections for the finance and insurance sector were also adjusted down (1.9 per cent, from 2 per cent), as were those for construction  (0.2 per cent, from 0.3 per cent) and the accommodation and food services sector (1 per cent, down from 1.3 per cent).

Economists in the latest MAS survey have revised this year’s forecast for headline inflation to 0.9 per cent, down from 1 per cent previously. The projected unemployment rate is maintained at 2.4 per cent. 

For inflation, the moderation in crude oil price expectations could keep prices subdued, said Ms Pan Jingyi, market strategist at IG Singapore.

On the factors that would impact the economic outlook for the second half of the year, Ms Pan said: “While the likelihood of a trade war breaking out has greatly diminished, the market is expected to still keep an eye on policies from the United States, given how advanced economies have played a key part in leading the recovery for Asian economies.”

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