Economists lower GDP forecast in latest MAS survey

SINGAPORE – Amid signs of economic uncertainties and weak manufacturing performance, economists have adjusted downward their expectation for Singapore’s growth outlook in the latest forecaster survey conducted by the Monetary Authority of Singapore (MAS).

Median forecasts by 22 economists responding to the quarterly survey put third quarter GDP growth at 3.2 per cent, down from the 3.5 per cent forecast in June’s survey. Similarly, full year growth is now expected to be 3.3 per cent, weaker than the 3.8 per cent previously forecast. This follows the 2.4 per cent growth recorded in the second quarter.

The weaker sentiments are partly triggered by manufacturing’s persistently weak performance, as last week’s Purchasing Managers’ Index showed a contraction in the sector in August. As a result, full year manufacturing growth is now expected to be 4.2 per cent in MAS’ survey, down the 5.6 per cent forecast in June, while non-oil domestic exports is flagged for a 1.1 per cent decline.

But economists remain confident over services sector’s resilience, expecting finance and insurance to grow by 5.5 per cent - same as the last forecast.

Meanwhile, inflationary pressure will likely lessen, as economists point a 1.8 per cent all items inflation rate for full year and 2.2 per cent for core inflation - which excludes private transport and accommodation costs - in the same period. Both are lower than the previous forecasts.