Economists slash Singapore 2015 growth forecast to 2.2% from 2.7%: MAS survey

Private sector economists have downgraded their expectations for Singapore's growth in the third quarter and for the full year.
Private sector economists have downgraded their expectations for Singapore's growth in the third quarter and for the full year.PHOTO: ST FILE

SINGAPORE - Private sector economists have downgraded their expectations for Singapore's growth in the third quarter and for the full year, reflecting concerns over the persistently choppy external environment, according to a quarterly survey released by the Monetary Authority of Singapore (MAS) on Wednesday (Sept 2).

Gross domestic product for the July-September quarter is forecast to expand by 2.1 per cent year-on-year, sharply down from the median prediction of 2.9 per cent growth made in June.

For all of 2015, the GDP growth forecast has been lowered to 2.2 per cent from 2.7 per cent previously.

Manufacturing is forecast to shrink this year - rather than expand as previously anticipated. From predicting a 0.5 per cent full-year growth in this key sector, economists now expect production to contract by a significant 2.7 per cent in 2015, and to shrink 2.5 per cent in the third quarter.

Non-oil domestic exports are now expected to grow by 1.5 per cent in 2015, down from 2.6 per cent in the June survey.

The downbeat estimates follow the slower 1.8 per cent growth that the Singapore economy recorded in the second quarter, a significant drop from the 2.8 per cent growth achieved in the first quarter.

The government has already trimmed its growth forecast for 2015 from 2 to 4 per cent to 2 to 2.5 per cent, noting the uncertainties ahead.

"The global economy performed weaker than expected in the first half of 2015," the Ministry of Trade & Industry said in August. "For the rest of the year, global growth is expected to pick up gradually, although the pace of growth is likely to be uneven across economies."

Since then, signs of recovery have yet to appear, with Singapore's non-oil domestic exports falling 0.8 per cent year-on-year in July. In the same month, manufacturing also contracted, reflected by the purchasing managers' index reading of 49.7.

Singapore's export and service-led economy will likely remain under pressure going forward, amid the worse-than-expected slowdown in China, whose economic woes have triggered stock market jitters worldwide in the past month.

The latest MAS survey showed that economists expect inflation rates for the full year to come in lower than previously estimated.

All-items inflation is now expected to fall by 0.2 per cent in 2015, down further from the 0 per cent change called in the June survey. Core inflation - which excludes private transport and accommodation costs - will gain 0.5 per cent, also down from the 1 per cent inflation previously forecast.

The official all-items inflation rates have dropped for nine straight months, with July's headline consumer price index showing a negative 0.4 per cent reading.

A total of 23 economists responded to MAS' latest survey which was sent out on Aug 11.