Economists maintain Singapore's 2017 GDP forecast at 2.5% but lopsided growth seen worsening

SINGAPORE - Private sector economists polled by Singapore's central bank maintained their 2017 growth forecast for the Singapore economy at 2.5 per cent but this headline number masks a deepening gulf between trade-driven sectors and those dependent on local demand.

The 2.5 per cent estimate - unchanged from their June forecast - comes as the surging manufacturing sector picks up the pace even as weaker sectors like construction and accommodation and food services continue to languish, according to the Monetary Authority of Singapore (MAS) in its latest quarterly survey of professional forecasters out on Wednesday (Sept 6).

The MAS survey reflects the views of 21 analysts who monitor the Singapore economy.

Their estimates come after the Government last month narrowed upwards its forecast for economic growth this year to 2 per cent to 3 per cent, from an earlier estimate of 1 per cent to 3 per cent, after the economy grew by a better-than-expected 2.9 per cent in the second quarter. Growth came in at 2.7 per cent in the first quarter.

According to the latest MAS survey, economists expect growth to quicken to 3.1 per cent in the third quarter, then slowing sharply to 1.8 per cent in the final three months of this year.

Their 2.5 per cent growth forecast for the whole of 2017, while more robust than last year's 2 per cent expansion, masks gulfs in performances across sectors.

 

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Source: MAS

Respondents to the MAS' latest poll expect the manufacturing sector to grow 6.6 per cent, up from an estimate of 5 per cent in the previous quarter's survey.

Manufacturing, which makes up a fifth of the economy and has been a key growth driver this year, is being lifted by strong global demand for semiconductors and related equipment.

The finance and insurance sector is also expected to pick up pace, with economists in the latest poll forecasting 2.9 per cent growth from 1.9 per cent in the previous survey.

However, other sectors are doing less well. The outlook for the construction sector has taken a sharp turn for the worse, with poll respondents tipping a contraction of 4.2 per cent. The previous survey, released in June, had respondents forecasting 0.2 per cent growth in the sector.

The outlook for the accommodation and food services sector also worsened - it is now expected to shrink 1.5 per cent, from previous estimates of a 1 per cent expansion.

Economists polled expect overall economic growth of 2.5 per cent next year, the same pace as this year.