They are bullish on external growth but bearish on the property scene.
The Monetary Authority of Singapore’s (MAS) latest survey revealed that Singapore economists retained their 2018 GDP growth forecast of 3.2%, but the probability of this forecast happening has been trimmed in favour of the chances that GDP could hit the 3.5-3.9% range.
CPI-All Items inflation and MAS Core Inflation for Q3 2018 are expected to come in at 0.8% and 1.9%, respectively. The median CPI-All Items inflation for 2018 as a whole is forecast to be 0.7%, down from 0.8% in the June survey.
In contrast, the forecast for MAS Core Inflation in 2018 rises to 1.7%, from 1.6% previously. As for the labour market, the respondents expect the unemployment rate to be 2.1% at year-end, unchanged from the previous survey.
Economists most commonly identified external growth, driven mainly by better performance in the US, as an upside risk for the Singapore economy. The number of those who included it in their list of potential upsides rose from 32% in the June survey to 47%.
Prospects towards the property sector dimmed due to the recent implementation of macroprudential cooling measures. Notably, 37% of the respondents cited the dissipation of trade tensions as a possible upside, as it would remove uncertainty from the forecast horizon.
Still, trade protectionism continues to weigh on the minds of 89% of respondents, with further escalation of trade rhetoric by the US and its trading partners, as well as the implementation of announced tariffs causing concern.
“A growing number of respondents cited slower growth in China as a downside risk, on the back of tightening credit conditions,” MAS added. “Faster than expected rate hikes by the US Federal Reserve also continue to be a downside risk for a number of respondents, though the proportion has fallen to 37%, from 47% in the previous survey.”
Moreover, tightening liquidity conditions in emerging markets have prompted an increasing number of respondents to flag risks of weaker external growth.
The respondents expect GDP growth to ease to 2.7% for 2019, whilst on average, economists expect it to fall within 2.5-2.9%.
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