Maintaining their forecast for Singapore's economic growth at 3.2 per cent for the year, economists are divided as to how the global economic outlook may ultimately impact Singapore's economy, a new poll by the Monetary Authority of Singapore found.
The latest survey of professional forecasters, released yesterday, found that economists saw external growth as having both upside and downside risks for Singapore.
Compared with previous polls in June and March, they were more upbeat about the manufacturing sector, but felt the opposite about the construction sector.
Manufacturing is expected to grow by 7.6 per cent year on year, significantly up from their earlier prediction of 5.3 per cent in the June survey, reversing earlier fears of a slowdown in the key sector that makes up a fifth of the economy.
The sector outperformed their forecast for the second quarter, growing by 10.2 per cent compared with their June prediction of 6.3 per cent.
In contrast, the construction sector shrank by 4.2 per cent this year - double the 2.1 per cent drop seen in the June poll.
DBS senior economist Irvin Seah said: "The construction sector might have to face a long winter due to a confluence of factors on construction demand, including the impact of property cooling measures and, now, the deferment of the high-speed rail."
Accommodation and food services is the only other sector that is tipped to perform better than previously expected, with 2.9 per cent growth, up from 2.2 per cent in the previous survey.
The finance and insurance sector is expected to expand by 6.7 per cent, down from a 7 per cent rise in the previous survey, and the wholesale and retail trade sector is forecast to grow by 1.5 per cent, compared with a 2 per cent increase previously.
The outlook for trade-dependent sectors follows the upside possibility of stronger global growth, driven mainly by better performance in the United States economy - cited by around half of the 23 economists polled.
The forecast for growth in non-oil domestic exports this year was kept at a robust 5 per cent, higher than the Government's own estimate of a 2.5 per cent to 3.5 per cent rise.
However, the economists were less optimistic about the domestic property market on the back of the latest cooling measures, and highlighted worries over faster-than-expected rate hikes by the US central bank, tightening liquidity controls in emerging markets and a slowdown in the world's second-largest economy, China.
Almost all cited trade protectionism as a major risk factor, with further escalation of trade rhetoric by the US and its trading partners, as well as the implementation of tariffs, causing concern. The US imposed higher tariffs on US$50 billion (S$69 billion) of imports from China earlier this year, prompting a tit-for-tat response from Beijing.
More economists (37 per cent) also flagged slower growth in China as a downside risk, on the back of tightening credit conditions, compared with the June survey (21 per cent).
"The fact that analysts highlighted both the strengthening US economy and the China slowdown shows a divergence of views by economists over how external growth will affect Singapore," noted Mr Seah.
Economists polled expect overall economic growth of 2.7 per cent next year, unchanged from their previous estimate, with a headline inflation of 1.5 per cent.