Singapore’s gross domestic product (GDP) is tipped to expand by 3.5% in 2022, according to market watchers in the Monetary Authority of Singapore’s (MAS) September survey of professional forecasters. This comes after the 4.4% GDP expansion seen in the 2Q2022, which stood below the respondents’ median forecast of 4.8% in the June survey.
The new estimate is lower than the 4.0% forecast stated in MAS’s March survey and the 3.8% forecast in the June survey. Within the key macroeconomic indicators, the respondents see lower y-o-y growths for the finance & insurance, construction and wholesale & retail trade industries.
In the current survey, respondents expect the economy to grow by 3.9% in 3Q2022.
According to the 21 economists and analysts who responded, the Singapore economy is most likely to grow by 3.0% to 3.9% in 2022, similar to the previous survey. The average probability assigned to the range is 52.8%, up from 43.6% previously.
Headline and core inflation to come in at 5.7% and 3.8% respectively in 2022
In the same survey, the 21 respondents are expecting Singapore’s CPI-All Items inflation to grow 5.7% y-o-y, up from 5.0% in the June survey. The median forecast for the MAS core inflation is also forecast to grow 3.8% y-o-y in 2022, up from 3.4% previously.
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Headline and core inflation are expected to come in at 6.6% and 4.6% respectively for the 3Q2022.
In addition, the respondents project that 2022 CPI-All Items inflation will most likely come in between 5.5% and 5.9%. Respondents had assigned the highest probability to the 4.5% to 4.9% range in the previous survey. Meanwhile, respondents in the current survey expect MAS core inflation to come in between 3.5% and 3.9%.
Within the labour market, respondents expect the unemployment rate to reach 2.0% at year-end.
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GDP projected to expand by 2.8% in 2023; inflation to ease then
Singapore’s GDP is estimated to expand by 2.8% in 2023, 0.2 percentage points lower than the 3.0% estimate in the March and June surveys.
In the survey, the respondents have assigned an average probability of 34.5% to the likelihood of growth falling between 2.0% and 2.9%.
At the same time, CPI-All Items inflation is forecast to grow at 3.5% in 2023 while MAS core inflation is expected to come in at 3.1%.
Respondents assigned the highest probabilities almost equally to the probability ranges between 3.0% to 4.4% for CPI-All Items inflation, and to the 3.0% to 3.4% range for MAS Core inflation. These forecasts have incorporated the effects of the 1% GST hike that will be implemented on Jan 1, 2023.
Private residential property prices estimated to rise, corporate profits to decline in 3Q2022
In 3Q2022, 75% of the 21 respondents anticipate that private residential property prices will rise q-o-q in 3Q2022, while the remaining respondents expect prices to remain stable.
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At the same time, 57.1% of respondents expect corporate profits to decline y-o-y in the same quarter. The remainder believe profits will be lower.
On SGD corporate bond spreads, 42.9% of respondents believe that they will remain stable in the coming quarter, while 28.6% of respondents each expect spreads to either widen or narrow during the period.
For the whole of 2022, 42.9% expect corporate profitability to improve, though an equal number of respondents project a decline.
Meanwhile, 57.1% of respondents anticipate corporate bond spreads to remain stable.
In 2022, 62.5% of respondents expect private residential property prices to increase, while the remainder believe property prices will remain stable.
For 2023, the majority of respondents project stable corporate profitability and SGD corporate bond spreads, as well as higher private residential property prices.
Looking ahead, respondents see the tighter global financial conditions and an escalation in geopolitical tensions as the main factors that could weigh on Singapore’s financial market and lending conditions.
That said, upside drivers include a slower-than-expected pace of monetary policy tightening among major central banks as well as easing of inflation and geopolitical tensions.
The spillover effects from an external growth slowdown among Singapore’s major trading partners were the most-cited downside risk (by 71.4% of respondents) to Singapore’s domestic growth outlook.
It was also ranked as the top downside risk by 57.1% of respondents.
Respondents also indicated their concerns about downside risks from a sharper-than-expected rise in inflation and an escalation in geopolitical tensions.
At the same time, a more robust growth in China was the most frequently cited upside risk to Singapore’s growth outlook, with 61.5% of respondents indicating this in their responses. Other upside risks flagged include an accelerated revival in travel and tourism driven by ongoing border re-openings, as well as the easing of inflation.
