Felicia Tan Published on Wed, Sep 01, 2021
Market watchers are expecting Singapore’s GDP to expand by 6.6% y-o-y in 2021, according to the survey of professional forecasters conducted by the Monetary Authority of Singapore (MAS).
The prediction stands slightly above the previous forecast of 6.5%.
The expansion for the full year is estimated to be led by the construction and manufacturing sectors at 16.6% and 11.4% y-o-y respectively.
Singapore’s non-oil domestic exports (NODX) rounded up the top three sectors with an estimated 9.0% y-o-y expansion.
In the June survey, the 27 private-sector economists and analysts say they expected the construction and manufacturing sectors to expand by 19.3% and 8.3% y-o-y respectively, while NODX was forecast to expand by 7.5% y-o-y.
To this end, the Singapore economy is likely to grow by 6.0% to 6.9% in 2021 with an average probability of 54.2%.
The same range was tipped as the most likely outcome in the previous survey, with an average probability of 37.6%.
Singapore’s GDP, according to the respondents, is forecast to expand by 3.9% in 2022, with a growth range of between 3.0% and 4.9%, and a combined probability of 64.3%.
The figure is slightly lower than the 4.0% estimated by the respondents in the June survey.
In the September survey, the respondents say they expect Singapore’s GDP to grow by 7.0% y-o-y in 3Q2021.
It was also noted that the 14.7% growth logged in the 2Q2021 was weaker than expected, compared to the 15.0% increase that was forecasted.
CPI-All Items inflation and MAS Core Inflation in 3Q2021 are expected to come in at 2.1% and 1.0% respectively.
The median CPI-All Items inflation for the full year is forecast to be 1.7%, up from the 1.4% pegged in the June survey.
The median forecast for the MAS Core Inflation has, however, dipped slightly to 0.7% from the previous estimate of 0.8% in June.
As for the labour market, the respondents expect the unemployment rate to reach 2.7% at the end of the year, unchanged from the previous survey.
CPI-All Items inflation is most likely to fall in the range of 1.5% to 1.9% in 2021, while MAS Core Inflation is expected to come in between 0.5% and 0.9%, unchanged from the previous survey.
In 2022, CPI-All Items inflation is expected to moderate in 2022 at 1.4%, while MAS Core Inflation is expected to come in at 1.3%. Market watchers, in the September survey, say they expect CPI-All Items inflation to come in between 1.0% and 1.9%. They have also assigned the highest probability to the 1.0% to 1.4% range for MAS Core Inflation.
Some 57.1% of the respondents expect corporate profits to increase y-o-y in 3Q2021, while 28.6% expect a decline. The remaining 14.3% believe profits will remain stable.
Meanwhile, all of the respondents expect that private residential property prices will pick up in 3Q2021, from 2Q2021.
SGD corporate bond spreads will also remain stable in 3Q2021, according to 57.1% of the respondents, while the remaining 42.9% believe they will narrow.
For the full year, all respondents expect private residential property prices to increase. A majority say they also expect corporate profitability to improve.
Some 57.1% of respondents have also projected a decline in corporate bond spreads in 2021.
In 2022, most respondents expect private residential property prices to increase, while 57.1% project that corporate profitability will improve.
Some 42.9% of respondents see that corporate bond spreads will remain stable in 2022, while an equal number expect that they will decline.
In the survey, the respondents identified a tightening of global financial conditions, an escalation in the Covid-19 pandemic and regulatory developments in China as the top three factors that could potentially weigh on the financial market and lending conditions in Singapore.
On the flipside, easing global financial conditions were seen as a factor that could drive improvement in domestic financial market and lending conditions.
A weak S$NEER, containment of the Covid-19 pandemic and capital inflows were also identified as potential upside drivers.
In its outlook statement, 90% of the respondents felt that a further deterioration in the Covid-19 situation and the potential re-tightening in public health measures were the biggest downside risk to Singapore’s growth outlook.
Respondents were also concerned about downside risks to supply chain disruptions, which could affect manufacturing and trade activity.
Some 30% of the respondents also identified risks arising from weaker-than-expected growth in China arising from the recent regulatory developments from the Chinese government.
Meanwhile, 70% of the respondents see the prospect of re-opening borders as the biggest upside to Singapore’s growth outlook, up from 44.4% in the previous survey.
The effective containment of the Covid-19 pandemic remained a key upside risk identified by 55% of respondents, down from the 83.3% in June.
Stronger-than-expected manufacturing output growth amid a robust global electronics demand were also seen as upside factors.
Photo: Bloomberg