SINGAPORE (July 17): RHB is maintaining a positive stance on Singapore’s economy, as Singapore is expected to see higher tourist spending and a more inclusive budget.
Singapore is still partially recovering from its revised 1.9% decline in its economy in 1Q.
Meanwhile, the economy grew 2.5% y-o-y or 0.4% q-o-q in 2Q17.
In a Friday report, RHB says the growth maintained its pace from 1Q, which was revised lower.
The manufacturing production sector slowed slightly to 8% y-o-y, due to slowing semiconductor and petrochemical output, and deepening declines in the production of pharmaceuticals and domestic-oriented products.
Construction activities saw a 5.6% y-o-y decline, and RHB expects the sector to remain weak as an oversupply in private residential and commercial properties is expected to peak this year.
The services producing industries saw a 1.7% increase y-o-y in 2Q, supported mostly by transportation and storage, as well as business services sectors.
In 5M17, inflation in Singapore saw a 0.7% y-o-y increase, driven mainly by a rebound in transportation costs as well as softer declines in housing and utilities prices.
RHB maintains its projection for Singapore’s GDP to grow 2.2% in 2017, a 2% increase from the previous year.
However, GDP growth is expected to soften in 2H, dragged by an anticipated moderation in exports.
RHB anticipated construction activity to remain wear as the property market bottoms out in the coming quarters. Private consumptions are however set to pick up slightly, as supported by the country’s higher tourist spending and a more inclusive budget.
“For the whole year, we raised our forecast for manufacturing output for 2017, but lowered our construction growth projection, leaving the GDP forecast unchanged,” says RHB.
Against the USD, SGD has appreciated by 5.3% YTD, but RHB expects it to weaken to 1.4 against the USD by end-2017, in parallel with further anticipated US interest rate hikes.
“As inflation is expected to remain benign and with property price declines slowing, we expect the Monetary Authority of Singapore’s (MAS) monetary policy stance to remain unchanged in October,” says RHB.
