Singapore’s GDP to grow 2.2% this year: UN agency

SINGAPORE — The Republic’s growth outlook is expected to pick up to 2.2 per cent this year and 2.5 per cent in 2018, mainly conditional on a revival in global trade. According to the Economic and Social Survey of Asia and the Pacific 2017 released yesterday by the United Nations Economic and Social Commission for Asia and the Pacific (Unescap), projected economic growth remains below the past trend.

The Monetary Authority of Singapore (MAS) last week reaffirmed its official estimates that the country’s growth outlook is expected to expand by 1 to 3 per cent this year, not markedly different from last year’s 2 per cent growth.

Global economic conditions are set to improve in the months ahead, led by the advanced economies of the United States and Japan, the MAS said in its biannual Macroeconomic Review published last Thursday.

Domestic demand is expected to strengthen somewhat, underpinned by stable employment conditions and supportive policy measures, such as higher corporate income tax rebates for small and medium enterprises. A key downside risk is heightened trade protectionism, which would especially undermine economic growth in the trade-oriented economy, said Unescap.

Meanwhile, despite the overall price decrease and supportive macroeconomic policy, private consumption growth moderated as unemployment edged up. The monetary policy aim has switched from gradual appreciation of the nominal effective exchange rate to zero appreciation, while public spending in the fiscal year ending March 2017 is set at almost 10 per cent higher than the previous year.

The near-term economic growth outlook for South-east Asia is even brighter, with higher growth rates projected for most economies in the region, according to the survey. Economic growth in the region is expected to improve further, to 4.7 per cent this year and 4.8 per cent in 2018, up from the 4.5 per cent last year.

While this remain subpar relative to the average annual growth rate of 5.3 per cent during the period 2011-2013, the pickup was underpinned by stronger growth in Indonesia, the Philippines and Thailand, which together account for more than 60 per cent of the region’s output.

In general, the positive prospects are supported by an expected pickup in commodity prices and supportive macroeconomic policies.

A key downside risk is possible delays in public investment projects.

Outside the region, factors such as rising trade protectionism and weaker import demand in China could undermine the expected recovery of trade flows. Despite the overall positive outlook, regional economies continue to face various economic imbalances and structural constraints, said the report.