After a year in the doldrums, the economy is seeing green shoots of recovery - with private sector economists becoming more optimistic about Singapore's growth prospects.
The economists polled by the Monetary Authority of Singapore (MAS) expect growth in the fourth quarter of the year to come in at 1 per cent compared with the same period last year. If so, this could mark a gradual stabilisation of the economy, which grew 0.2 per cent in the second quarter and 0.5 per cent in the third.
Much of their hope is pinned on the manufacturing sector, which is expected to stop contracting and register modest growth next year.
The latest quarterly poll of professional forecasters by MAS released yesterday showed that the economists expect gross domestic product growth of 0.7 per cent this year - up from the 0.6 per cent they had forecast in the previous survey in September.
The modest recovery is expected to continue through next year, when the economists are predicting growth of 1.5 per cent.
This is partly because some of them, like CIMB Private Banking economist Song Seng Wun, feel that the manufacturing sector, which was floundering, may have bottomed out, with a stronger-than-expected upswing in the global tech cycle.
"One area that we took heart from is the factory output figure out in November, which was a big surprise," said Mr Song, referring to the robust 4 per cent growth that outstripped expectations.
He said chip manufacturers had seen demand stabilise with new products driven by 5G technology. Digitalisation has also prompted businesses to invest more in technology. "We see stock prices of tech companies getting a lift over the last couple of months as well, with hope that the cycle may have bottomed out," said Mr Song.
United Overseas Bank economist Barnabas Gan added: "The manufacturing sector, which has been the key drag on overall growth in 2019, is expected to recover into 2020."
Economists now expect the manufacturing sector to shrink by just 1.4 per cent this year - instead of the 2.4 per cent contraction they predicted in the previous survey - and grow 0.7 per cent next year.
They also raised their forecasts for sectors such as construction, private consumption, and accommodation and food services.
Associate Professor Lawrence Loh of the National University of Singapore Business School said: "A bright spark for Singapore's economy is the hospitality sector, which includes lodging, food and beverage, and events - this has continued to drive growth."
In contrast, economists are less hopeful of the growth prospects for retail trade, and the finance and insurance industry.
Minister for Trade and Industry Chan Chun Sing had said last month that it is premature to say the worst may be over for the Singapore economy, given that many global uncertainties remain, which could affect the Republic.
Economists remain concerned that a sharper-than-expected slowdown in China could hurt growth prospects here. But they are hopeful that trade tensions will ease.
Mr Song said: "Although risks remain, the world may be adjusting to them. The global economy is managing to plod along and even looks like it may have bottomed out in terms of the impact on consumer and business confidence.
"If there is no further escalation, the worst of the tariff impacts may be behind us by the second half of next year."
A total of 22 private sector economists and analysts responded to the survey conducted last month.
