Singapore’s gross domestic product (GDP) is estimated to expand by 1.9% in 2023, according to the Monetary Authority of Singapore’s (MAS) March survey of professional forecasters.
The latest estimate stands slightly above the previous forecast of 1.8% in the previous survey in December 2022.
According to the 21 economists and analysts who responded to the survey, the most likely outcome is for the Singapore economy to grow by 2.0% to 2.9% in 2023 with an average probability of 34.3%.
This is higher than the previous survey where respondents assigned the highest probability to growth outturns between 1.0% to 1.9%.
In the current survey, respondents also expect Singapore’s economy to grow by 1.3% in 1Q2023. At the same time, they have projected Singapore’s CPI-All Items inflation (or headline inflation) and MAS Core Inflation to come in at 6.5% and 5.5% in the first quarter respectively.
The median forecast for headline inflation for 2023 is at 5.0%, down from the 5.2% estimated in the December 2022 survey. Meanwhile, respondents have raised their core inflation forecast for 2023 to 4.4% from 4.0% previously.
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In the March survey, the market watchers polled have projected that the headline inflation for 2023 will most likely come in between 4.5% and 5.9%, encompassing three probability ranges. Core inflation is expected to come in between 4.0% and 4.4%.
Within the labour market, the rate of unemployment is expected to be at 2.2% at the end of 2023.
2024 estimates
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In 2024, the respondents project that Singapore’s GDP will expand by 2.5% with the most probable outcome for growth falling between 2.0% and 2.9%. An average probability of 33.2% have been assigned to this range.
Headline inflation is forecast to come in at 3.1% in 2024 while core inflation is pegged to come in at 2.9%. Respondents assigned the highest probability to the 3.0 to 3.4% range for both headline and core inflation figures.
Corporate profits expected to decline in 1Q2023; private property prices expected to increase
Further to the survey, it was found that 71% of the respondents expect corporate profits to decline y-o-y in the 1Q2023. At the same time, an equal number of respondents (at 14% each) expect profits during the period to remain stable or grow on a y-o-y basis.
Meanwhile, 43% of respondents polled expect private residential property prices to increase in the 1Q2023 while 29% of respondents each expect prices to remain stable or decline.
In this survey, it was found that an equal number of respondents (43%) assessed that Singapore dollar (SGD) corporate bond spreads will either remain stable or increase in the 1Q2023, while the rest expect spreads to narrow.
For the whole of 2023, 86% of respondents expect corporate profitability to decline. At the same time, 57% of respondents expect private residential property prices to increase while 29% expect property prices to decline.
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In addition, 43% expect corporate bond spreads to increase, while an equal number estimate that spreads to remain stable.
For 2024, the majority of respondents project higher corporate profitability as well as stable private residential property prices and corporate bond spreads.
In the survey, respondents cited that tighter global financial conditions, a stronger US dollar (USD) and elevated inflation may weigh on the financial market and lending conditions in Singapore.
All respondents identified a slower pace of tightening of global financial conditions, including less aggressive rate hikes by central banks, as an upside driver of domestic financial market and lending conditions. Respondents also listed capital inflows into Singapore, a weaker S$NEER and improved external economic outlook as other potential upside drivers.
Meanwhile, 56% of respondents each have cited an escalation in geopolitical tensions and inflationary pressures as downside risks to Singapore's domestic growth outlook. At the same time, spillovers from an external growth slowdown was most frequently ranked as the top downside risk, with 31% of respondents doing so.
On the other hand, 88% of the respondents polled named a more robust growth in China as an upside risk to Singapore's growth outlook. Respondents also flagged upside risks from better-than-expected external economic growth and a faster tech cycle recovery.
Singapore's monetary policy
An increase in the slope of the S$NEER policy band in April is expected by 24% of the respondents polled, down from the 33% reported in the previous survey in December 2022. The proportion of respondents who anticipate an increase in the slope of the S$NEER policy band in October has also fallen.
At the same time, 24% of respondents expect MAS to raise the level at which the S$NEER policy band is centred in the April review, up from 11% in the previous survey. None of the respondents foresee adjustments to the width of the policy band in 2023.
