Singapore economic survey expected to confirm sluggish growth in Q2

A woman at a protest march against Brexit. Britain's decision to leave the European Union has been a cause of concern for economists looking at Singapore's growth outlook.
A woman at a protest march against Brexit. Britain's decision to leave the European Union has been a cause of concern for economists looking at Singapore's growth outlook.PHOTO: REUTERS

Singapore's latest estimate of second-quarter gross domestic product (GDP) is likely to confirm sluggish growth in the April-June quarter, with the outlook clouded by concerns over Brexit and weakening global demand.

The second-quarter economic survey of Singapore, with detailed breakdowns of growth by industry, is set to be released on Thursday.

The median forecast in a Reuters survey of 13 economists was that GDP in the April-June quarter expanded by 0.8 per cent from the previous three months on an annualised and seasonally adjusted basis.

That would be the same as the Government's advance estimate of second-quarter GDP released last month.

Economic growth in Singapore is likely to remain low compared with recent years, said Mr Hayato Nakamura, a senior economist for Bank of Tokyo-Mitsubishi UFJ.

He expects growth to be held back by the "stagnation of global trade", particularly in Asia, as well as high business costs, which have eroded the competitiveness of Singapore's manufacturing sector.

Year-on-year GDP growth is expected to match the advance estimate of 2.2 per cent, according to the Reuters survey.

Some economists say the Government might announce a revised forecast for 2016 growth, after the Monetary Authority of Singapore (MAS) said last month that the forecast of 1-3 per cent growth was under review. The growth forecast might be tightened to "about 2 per cent", said Mr Song Seng Wun, an economist for CIMB Private Banking.

MAS managing director Ravi Menon said last month that the central bank's current monetary policy stance remains appropriate and only a marked worsening in the global economy or significant shift to the inflation outlook would prompt a change.

The MAS said it was closely watching risks related to Britain's vote to leave the European Union, the United States' economic recovery and the slowdown in China.

In April, the MAS unexpectedly eased policy by setting the rate of appreciation of the Singapore dollar's policy band at zero per cent.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 09, 2016, with the headline 'S'pore survey expected to confirm sluggish growth in Q2'. Print Edition | Subscribe