Private-sector economists lower Singapore full-year growth forecast slightly to -6%

PRIVATE-SECTOR economists now expect Singapore's gross domestic product growth to decline 6 per cent this year, worsening slightly from earlier expectations of a 5.8 per cent fall, according to the latest quarterly Monetary Authority of Singapore (MAS) survey of professional forecasters released on Monday.

After a 13.2 per cent fall in the second quarter, the economy is expected to contract by a milder 7.6 per cent year on year in the third quarter.

For the expected recovery in 2021, respondents see full-year growth coming in at 5.5 per cent, up from 4.8 per cent in the last survey.

Sent out on Aug 12, the survey received 26 responses from private-sector economists. It does not represent MAS's views or forecasts.

Full-year growth expectations worsened most sharply for construction, with respondents now expecting it to come in at -23 per cent, compared to -11.4 per cent in the June survey.

The forecast is also much grimmer for private consumption at -11.8 per cent, compared to -5.2 per cent earlier.

Expectations also worsened slightly for accommodation and food services.

But a smaller contraction is predicted for wholesale and retail trade, while better growth is expected for finance and insurance, as well as manufacturing. Non-oil domestic exports are also now forecast to grow 4.5 per cent, an improvement from the earlier forecast of zero growth.

Inflation expectations have moderated since the June survey, to -0.4 per cent for headline inflation and -0.3 per cent for core inflation, from -0.5 per cent for both previously.

Unemployment is now forecast to be 3.5 per cent at the end of the year, improving marginally from the previous 3.6 per cent forecast.

A tightening in global financial conditions remained the top perceived downside risk to growth, followed by an escalation in the Covid-19 pandemic and worsened tensions between the US and China.

As for upside risks, fewer respondents cited the possibility of global financial conditions easing, while more saw a chance for growth to be aided by fiscal stimulus and Covid-19 containment.