SINGAPORE (Sept 4): Economists are lowering their forecasts for Singapore’s gross domestic product growth amid macroeconomic uncertainty as trade tensions between the US and China continue to rage on.
In the Monetary Authority of Singapore’s September survey of professional forecasters, some 23 economists and analysts who closely monitor the Singapore economy forecast GDP growth to slow to 0.6% for 2019 from 2.1% in a previous survey.
This comes after the Singapore economy grew marginally by 0.1% year-on-year for the 2Q19 ended June, lower than the 1.6% forecasted by respondents in the previous survey.
Economists now expect GDP growth to improve slightly to 0.3% for 3Q19.
MAS says this reflects the views received from the respondents, and does not represent the central bank’s views or forecasts.
Singapore last month downgraded the GDP growth forecast for 2019 to between 0% and 1%, with actual growth is expected to come in at around the mid-point of the forecast range.
This is the second straight quarter that the city state has slashed its growth expectations.
See: Singapore slashes GDP, trade forecasts as economy stalls
Respondents in the latest MAS survey expect the manufacturing and wholesale and retail trade sectors to shrink in 2019.
The September survey sees the median forecasts for these sectors sinking further, with manufacturing shrinking 2.4% from 0.2% in June, and wholesale and retail trade shrinking 2.8% from 0.3% in June.
Non-oil domestic exports are also expected to shrink even further to 9.2% from 2.1% in June.
The economists also expect GDP growth for 2020 to rise 1.6%, with estimates ranging from 1% to 1.9%. This is lower than the 2% to 2.4% range in the June survey.
Trade tensions, in particular between the US and China, dominated risks identified by survey respondents.
Around half of the respondents cite a slowdown in China brought about by external uncertainty and domestic financial market instability as a continuing concern.
Meanwhile, geopolitical risks in Hong Kong and the Persian Gulf have also crept up the list of downside risks. Some 38.9% of respondents cite these as potential risks in the September survey, up from just 5.9% in June.
Conversely, easing of trade tensions topped the upside risk for Singapore, similar to the survey in June.
However, respondents believe that the scenario is becoming less likely, with only 61.1% of respondents citing it as an upside risk in the September survey, down from 70.6% in June.
Fiscal stimulus in Singapore and elsewhere is the next most common upside risk, with the proportion of respondents rising from 17.6% in the previous survey to 44.4%.
A third of respondents also noted that easing global financial conditions, led by more accommodative monetary policy in developed markets, could present another possible upside scenario.
