Singapore's economic prospects this year have dimmed even further amid a weak global outlook, according to a new survey.
Growth is likely to come in at a modest 1.9 per cent this year, down from an earlier forecast of 2.2 per cent, say economists polled by the Monetary Authority of Singapore (MAS) in its quarterly survey out yesterday.
The latest poll, sent out on Feb 24, reflects views from 24 economists who closely monitor the Singapore economy.
Government forecasts tip growth to come in at between 1 per cent and 3 per cent this year.
Economists said the outlook worsened at the start of this year amid oil price volatility and signs of flagging global demand.
The jury is still out on China's mid-term growth prospects, while other traditional global growth drivers like the United States continue to eke out a slow recovery.
Singapore's manufacturing and finance and insurance sectors have been hit the hardest, with economists giving these industries the sharpest growth downgrades in the latest survey.
2.7% Expected decline in manufacturing in latest survey
1.2% Expected decline in manufacturing in previous survey
Manufacturing, which makes up a fifth of the Singapore economy, is now tipped to shrink 2.7 per cent this year, a deeper contraction than the 1.2 per cent decline estimated in the previous survey.
"Manufacturing is still very much responsible for the state of the numbers," said CIMB Private Bank economist Song Seng Wun.
The finance and insurance sector, which contributes about 13 per cent of gross domestic product, is expected to expand 3.6 per cent according to the latest survey, down from an earlier estimate of 5.9 per cent.
UOB economist Francis Tan noted that bank loans have been shrinking in recent months, a possible sign that financial institutions are holding back on lending given the poor outlook.
Meanwhile, survey respondents expect inflation for this year to come in at negative 0.2 per cent, down from an estimate of a 0.5 per cent rise in the previous survey.
Those surveyed also expect MAS core inflation - seen as a better gauge of out-of-pocket expenses for households - to come in at 0.8 per cent, down from the 1 per cent projected in the previous survey.
This comes as global energy prices experienced a further rout at the start of the year amid ongoing uncertainty over the economic outlook.
Mr Song said he is still keeping his fingers crossed for brighter prospects in the second half of this year. "We've said that for the past few years about the second half and so far it hasn't panned out... But with the labour market in developed economies improving, there is a spark of hope. The underlying assumption that cheaper energy is good for global growth also still stands."
Economists in the latest MAS survey expect Singapore's economy to grow a stronger 2.5 per cent next year.