Analysts raise Singapore's 2017 growth forecast to 2.5% from 2.3%: MAS survey

SINGAPORE - Analysts have raised their growth forecast for Singapore's economy this year to 2.5 per cent, up from 2.3 per cent, according to a quarterly survey released by the Monetary Authority of Singapore (MAS) on Wednesday (June 14).

For 2018, the forecast has been lifted to 2.5 per cent, up slightly from 2.4 per cent.

The Singapore economy has been outperforming projections recently, expanding by 2.7 per cent in the first quarter of 2017, which was higher than the forecast of 2.6 per cent in the March survey conducted by MAS.

For the second April-June quarter, the analysts in the MAS survey expect the economy to expand by a similar 2.7 per cent.

The analysts were more bullish about the performance of the manufacturing sector, forecasting growth of 5 per cent compared to 4.5 per cent in the previous survey. But they slightly lowered their expectations for the construction, finance and insurance, as well as accommodation and food services sectors.

Notably, forecasts for growth in the construction industry, which plunged from 2.4 per cent to 0.3 per cent in the March survey, declined 0.2 per cent in the June survey.

With at least one more US interest rate cut expected this year, analysts hiked by a significant rate their forecast for the Singapore dollar exchange rate with the US dollar. They now expect the Singdollar to trade at US$1.460 at year-end from S$1.410 in the March survey.

To follow, their forecast for three-month Sibor, or Singapore Interbank Offered Rate, the benchmark for most home loans, was raised to 1.50 per cent by year-end from the previous projection of 1.30 per cent.

Inflation for the year is expected to come in at 0.9 per cent, slightly below the 1 per cent in the previous survey. For the second quarter of this year, inflation is expected to come in at 0.7 per cent, down from 0.8 per cent.

The forecast for core inflation - which excludes accommodation and car prices - remains unchanged at 1.5 per cent. It is predicted to come in at 1.6 per cent for the second quarter .

For the labour market, the analysts expect the unemployment rate will be 2.4 per cent at year-end, unchanged from the previous prediction in March.

The June survey was sent out on May 25 to 27 economists and analysts who closely monitor the Singapore economy. Their projections reflect the views received from 21 respondents and does not represent MAS' views or forecasts.