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Economists raise Singapore’s growth forecast to 2.3%

SINGAPORE — The stronger-than-expected performance of Singapore’s economy in the fourth quarter of last year and a recovery in global trade, among other factors, have led private sector economists to significantly upgrade their full-year forecast for 2017.

SINGAPORE — The stronger-than-expected performance of Singapore’s economy in the fourth quarter of last year and a recovery in global trade, among other factors, have led private sector economists to significantly upgrade their full-year forecast for 2017.

A quarterly survey of professional forecasters conducted by the Monetary Authority of Singapore (MAS) — which was released on Wednesday (March 15) — showed that the 23 respondents project gross domestic product (GDP) to grow by 2.3 per cent this year, up from the previous forecast of 1.5 per cent. 

For the first quarter, they expect the economy to expand by 2.6 per cent. GDP growth for next year is projected to be 2.4 per cent. 

On the factors behind the increased optimism, ANZ economist Ng Weiwen cited the “ongoing recovery in global trade, the reflationary policy under (United States President Donald) Trump’s administration, and the fiscal impulse from the Budget”.

CIMB economist Song Seng Wun added: “Singapore is an export-oriented economy, and with the manufacturing and exports doing better in recent months, this has led to the optimism in headline numbers. 

‘‘While we cheer on the upgrade, the quality is still an issue as not all sectors saw equal growth.” 

Final data released last month by the Ministry of Trade and Industry showed the Singapore economy expanding by 2.9 per cent in the final three months of 2016, higher than the median forecast of 0.8 per cent for the quarter reported in the previous MAS survey. 

For 2016 as a whole, the economy grew 2 per cent, higher than the survey’s median forecast of 1.4 per cent.

In the latest survey, the economists expect non-oil domestic exports to grow by 6.1 per cent this year, compared to 0.3 per cent previously. 

Manufacturing is now expected to expand 4.5 per cent this year, up from 1.1 per cent. 

However, they slashed their 2017 forecast for the construction industry (0.3 per cent, down from 2.4 per cent) and the accommodation and food services sector (1.3 per cent, down from 1.7 per cent). 

The weaker performance for construction is attributed to fewer projects from the private sector. 

Despite the overall improvement in sentiments, Mr Song said that geopolitics would remain a risk. 

“The Dutch elections this week is likely to be another example of populism coming to the fore. Also, Trump’s protectionist measures still run a risk to growth,” he said. 

Nevertheless, in the short term, the Republic will benefit from a stronger US economy, he added. 

“Singapore is a part of the supply chain and the stronger US, a stable China, and improvement in European Union consumer spending ... paints a brighter picture for export-oriented sectors.”

Economists in the latest MAS survey have maintained their 2017 forecast for headline inflation and unemployment rate at 1.0 per cent and 2.4 per cent, respectively.

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