Economists upgrade 2017 growth forecast to 2.3% on hopes of better manufacturing performance

The main driver for growth will remain manufacturing, a sector that should grow by 4.5 per cent this year compared with the 1.1 per cent previously forecasted.
The main driver for growth will remain manufacturing, a sector that should grow by 4.5 per cent this year compared with the 1.1 per cent previously forecasted.PHOTO: ST FILE

SINGAPORE - Confidence in Singapore's economic prospects continues to rise, with economists upgrading their growth forecasts in 2017.

The economy is now expected to grow by 2.3 per cent this year, the median forecast in the latest economist survey conducted by the Monetary Authority of Singapore showed. This was higher than the 1.5 per cent growth previously estimated.

The main driver for growth will remain manufacturing, a sector that should grow by 4.5 per cent this year compared with the 1.1 per cent previously forecasted.

In the near term, the economy is expected to grow by 2.6 per cent per cent in the first quarter, while manufacturing is forecasted to grow by 6.1 per cent.

The MAS survey report, out on Wednesday (March 15), reflected the views of 23 economists and analysts.

The improved forecasts followed the better than expected growth in the fourth quarter last year, when the Singapore economy expanded by 2.9 per cent - overshooting the 0.8 per cent median forecast.

The strong fourth quarter showing in turn pushed 2016 full year growth to 2 per cent, also higher than the median forecast of 1.4 per cent.

This was helped by manufacturing, which was the best performing sector last year and grew 3.6 per cent.

The Ministry of Trade and Industry has in February released its official forecast of 1-3 per cent growth in 2017, with the hope that global growth will pick up on the back of firm recovery in the United States and resilient domestic demand in Asean.

Economists agreed with that view, as their latest median forecast put non-oil domestic exports growth at 6.1 per cent in 2017, up from just 0.3 per cent in their previous forecast.

They also expect finance and insurance full year growth to slightly improve, from 1.8 per cent to 2 per cent in the latest survey.

For 2018, the full year economic growth should come in at 2.4 per cent, the survey results showed.

Meanwhile, this year's all-items inflation is expected to come in at 1 per cent, unchanged from the previous survey, while core inflation - which excludes accommodation and private road transport costs - should be 1.5 per cent.

The economist median forecast for 2017 unemployment rate was unchanged at 2.4 per cent. The three-month Singapore Interbank Offered Rate forecast of 1.50 per cent this year was also unchanged from the previous survey.