Singapore's economic prospects continue to dim amid a weak global outlook, according to a Monetary Authority of Singapore (MAS) survey yesterday.
Growth is expected to come in at 1.8 per cent this year, down from an earlier forecast of 1.9 per cent, say the 27 economists and analysts it polled for its quarterly survey out yesterday.
Government forecasts tip growth to come in at between 1 per cent and 3 per cent for the full year.
But the economy expanded by 1.8 per cent in the first quarter, beating the median forecast of 1.6 per cent reported in the March survey.
HSBC economist Joseph Incalcaterra said: "The better-than-expected growth in the first quarter can be attributed to a surge in manufacturing output on quarter-on-quarter terms, offsetting a contraction in services."
However, he said most of the surge in manufacturing came from the pharmaceutical segment, which is very volatile and has fewer linkages with the broader economy, given the relatively low labour intensity.
Economists also said the economy continues to muddle through - despite a slight rebound in oil prices, which remain volatile - alongside signs of stagnant global demand.
The wholesale and retail trade sector and the finance and insurance sector have been hit the hardest, with economists giving these industries the sharpest growth downgrade in the latest survey.
Wholesale and retail trade is now tipped to grow only 2 per cent this year, a deeper contraction than the 3.9 per cent estimated in the previous survey.
The finance and insurance segment is forecast to expand only 2.9 per cent, down from an earlier estimate of 3.6 per cent.
UOB economist Francis Tan noted that bank loans have been contracting on a year-on-year basis for seven months.
"Both the bank loans and stock brokerage fees will cause a drag in the finance and insurance sector, and still grow, but much slower than last year," he added.
Despite the gloom, economists and analysts revised their growth projections for the manufacturing sector, from a negative 2.7 per cent to zero per cent, signalling less pessimism in the sector.
Mr Tan noted that the uncertainty surrounding Brexit is a cause of worry. "If such an event happens, it will cause investor confidence to go down, and even shift economies into recession, particularly those that are export-driven, like ours," he said.
Meanwhile, survey respondents expect inflation for this year to come in at negative 0.4 per cent, down from an estimate of a negative 0.2 per cent in the previous survey.
They expect core inflation - seen as a better gauge of out-of-pocket expenses for households - to come in at 0.8 per cent, the same as projected in the previous survey.
Economists and analysts expect Singapore's economy to grow a stronger 2.1 per cent next year.
Mr Tan noted: "Things are tough; It's not an outright recession.
"The growth rate is small, but we're still growing compared with last year."