Business
An outperformance in the electronics sector is predicted to boost the Singapore economy but economists are increasingly concerned about the risk of a global trade war.
FILE PHOTO: A view of the skyline of Singapore March 26, 2017. REUTERS/Woo Yiming/File Photo
SINGAPORE: Private sector economists are pencilling in higher growth for Singapore’s economy this year, the latest quarterly survey from the Monetary Authority of Singapore (MAS) showed on Wednesday (Mar 14).
Economic growth for 2018 is expected to come in at 3.2 per cent, according to the 24 economists and analysts polled. This is up from an earlier 3 per cent forecast in December.
For next year, expectations are for Singapore’s gross domestic product (GDP) to expand by 2.8 per cent.
This comes on the back of official data last month, which showed the economy clocking faster-than-expected growth of 3.6 per cent for 2017 and the year’s final quarter. Official estimates also tipped 2018 growth to come in slightly above the middle of the forecast range of 1.5 to 3.5 per cent, barring the materialisation of any downside risks.
Since the last survey in December, respondents have lifted their forecasts for most economic indicators for 2018, including finance & insurance, wholesale & retail trade, accommodation & food services and private consumption.
The indicators that either maintained or had a downward revision in their forecasts are manufacturing, construction and non-oil domestic exports.
Nearly half of the respondents singled out an outperformance in the electronics sector as the main potential upside for the economy. Buoyed by stronger global demand, the manufacturing sector, particularly electronics, has been the key driver of Singapore’s economic growth for 2017 though chances of a moderation have been flagged partly because of a comparison against a high base.
A generally positive outlook on external growth also continues to be another common upside risk in the survey results, at around 41 per cent.
There also appears to be increasing optimism on the property market, with a noticeable rise in the proportion of respondents citing it, from 27 per cent in the previous survey to 41 per cent.
On the other hand, 88 per cent of respondents cited the possibility of a global trade war scenario as one that they are concerned about, more than double of that in the December survey.
The threat of a slowdown in the Chinese economy is comparatively more subdued, at 53 per cent of responses, down from 67 per cent previously. Financial sector uncertainty due to global market movements, at 18 per cent of responses, represents the third most common downside risk.
The forecasts for both headline and core inflation in 2018 remained unchanged from the previous survey at one and 1.6 per cent, respectively.
On the labour front, respondents also expect the unemployment rate to be 2.1 per cent at year-end, unchanged from the previous survey.
