By The Edge Singapore

Felicia Tan Published on Mon, Jun 14, 2021 

Some 27 economists and analysts surveyed by the Monetary Authority of Singapore (MAS) have estimated a 6.5% expansion in Singapore’s GDP in 2021.

According to MAS’s Survey of Professional Forecasters for June, this is above the 5.8% expansion predicted in the previous survey in March.

The expansion is estimated to be led by the construction and manufacturing sectors, with a 19.3% and 8.3% y-o-y expansion.

Non-oil domestic exports (NODx) rounded up the top three sectors, with an estimated 7.5% y-o-y expansion for 2021.

That said, according to the mean probability distribution, the most likely outcome is for the Singapore economy to grow by 6.0% to 6.9% in 2021, with an average probability of 37.6%.

The economists and analysts in the March survey projected Singapore’s GDP for 2021 to be 5.0% to 6.9%, with a combined probability of 61.8%.

The same respondents estimate that Singapore’s GDP will expand by 4.0% in 2022, with a growth range of 3.0% to 4.9, and a combined probability of 60.9%.

The Singapore economy, which expanded by 1.3% y-o-y in the 1Q2021, stood above the respondents’ forecast of a 1.1% contraction in March.

In the same survey, the respondents estimate that the economy will expand by 15% y-o-y in the 2Q2021.

CPI-All Items inflation and MAS Core Inflation in the 2Q2021 are expected to come in at 1.9% and 0.7% respectively.

The median CPI-All Items inflation is expected to expand by 1.4% in 2021, up from 0.9% in the March survey, with the range falling between 1.5% and 1.9%.

The median forecast for the MAS Core Inflation for 2021 was up slightly at 0.8% from 0.7% previously, with a range of 0.5% to 0.9%.

Both CPI-All Items and MAS Core Inflation are forecast at 1.2% in 2022, with a range of 1.0% to 1.4%.

The respondents in the survey expect the unemployment rate to reach 2.7% for the year, down 0.2 percentage points from the March survey.

Some 75% of respondents expect corporate profits to increase y-o-y in the 2Q2021, while the remaining 25% expect a decline.

A similar percentage of respondents expect residential property prices to pick up in the 2Q2021, while the rest expect prices to remain stable.

Finally, 50% of the respondents expect SGD corporate bond spreads to remain stable in the 2Q2021, while 37.5% believe they will narrow. Another 12.5% have estimated that the SGD corporate bond spreads will increase.

Around 90% of respondents are buoyant on improving domestic financial market and lending conditions, up from the 75.0% in the March survey, due to the easing financial conditions.

In the same survey, the Covid-19 pandemic was on the minds of the majority of the respondents, with most of them – or 76.5% – deeming the escalation of Covid-19 cases as the biggest downside risk. This was followed by 5.9% of economists citing geopolitical tensions as a potential downside risk. None of the economists and analysts cited the labour market as another downside risk.

On the other hand, some 55.6% of economists cited the containment of the Covid-19 pandemic as the top catalyst for upside to the Singapore economy. Another 11.1% of economists cited the manufacturing and the tech cycle as an “upside risk” to the economy, while the final 11.1% cited the re-opening of borders as a positive re-rating factor for the Singapore economy.