PRIVATE-SECTOR economists have grown less upbeat about Singapore’s full-year growth, with a median forecast of 1 per cent in a quarterly survey on Wednesday (Sep 6), down from 1.4 per cent in the previous survey.

The outlook worsened particularly for manufacturing and non-oil domestic exports (NODX). Alongside the weaker growth outlook, all respondents expect monetary policy to stay unchanged in October’s decision.

This was in the latest quarterly survey of professional forecasters by the Monetary Authority of Singapore (MAS). Sent to 25 forecasters on Aug 15, with 22 responses, the survey reflects their views and not the MAS’ own.

For full-year gross domestic product (GDP) growth, respondents thought the likeliest range was 0 per cent to 0.9 per cent, with nearly a 50-50 chance – 45 per cent – of this.

Compared with the June survey, expectations worsened for all components except wholesale and retail trade. In particular, manufacturing is expected to decline 4.4 per cent, worse than the previously predicted 1.3 per cent fall. NODX is expected to contract 10.5 per cent, down from 5.5 per cent previously.

But the unemployment outlook continued to improve. The overall unemployment rate is expected to be 2 per cent by year-end, marginally below 2.1 per cent in the last survey.

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This suggests persisting labour market tightness, and “bears watching as expected wage growth in the coming quarters will have an important influence on whether businesses continue to pass on costs to end-consumers”, said OCBC chief economist Selena Ling.

The gloomier growth forecast came as Q2 GDP growth missed the mark at 0.5 per cent, a full percentage point below the June survey’s median forecast of 1.5 per cent. For Q3, respondents expect 1 per cent growth.

As first-half growth was just 0.4 per cent, a better second half is required to meet the full-year rate, noted RHB senior economist Barnabas Gan.

DBS economist Chua Han Teng expects the manufacturing drag to narrow in H2, citing slightly positive industry sentiment; the global semiconductor turnaround; and medium-term optimism for artificial intelligence-related chips. This is even as lingering geopolitical tensions could disrupt supply chains.

For full-year headline inflation, the median forecast moderated to 4.7 per cent, from 5 per cent in June. The outlook for core inflation, which excludes accommodation and private transport, stayed at 4.1 per cent.

The survey expectations remain within official forecast ranges. For growth, the official forecast range is 0.5 per cent to 1.5 per cent; for headline inflation, 4.5 per cent to 5.5 per cent; and for core inflation, 3.5 per cent to 4.5 per cent.

For Q3, respondents expect headline and core inflation of 4 per cent and 3.5 per cent respectively.

RHB’s Gan foresees some easing, but reiterated the possibility of sticky prices in Q3. This could be due to upward pressures from improving global demand; higher agricultural prices due to El Nino weather patterns; and high oil prices as Russia and Opec cut supply.

Ling agreed that energy and food prices bear watching. These may contribute to volatile inflation in coming months and pose a challenge for central banks, she said.

While all respondents expect MAS to stay put in October, some see possible changes in the April 2024 decision.

More than a quarter (27.8 per cent) of respondents expect policy to be loosened in April, by reducing the slope of the Singapore dollar nominal effective exchange rate policy band. One respondent expects an increase in the slope.

One respondent also expects the policy band to be re-centred downwards in April, in a loosening move.

The varied views on MAS policy are due to the further goods and services tax hike and revised carbon pricing in 2024, said Ling.

The most-cited downside risk to Singapore’s growth outlook was spillovers from an external slowdown, named by 68.8 per cent of respondents – up from the June survey – and considered the top risk by 25 per cent.

China’s growth was one of the top downside risks. “This is unsurprising to us, given China’s bumpy recovery and waning post-reopening growth momentum, and its importance to Singapore as a key export destination and tourism source,” said DBS’ Chua.

The top upside risks remained China’s reopening, better-than-expected external growth and the tech cycle recovery. However, fewer now see a chance of an unexpected boost from China: 46.7 per cent, down from 70.6 per cent in June.

Fewer respondents also cited the tech cycle as an upside risk: 33.3 per cent, down from 41.2 per cent. Ling noted that this comes “as US-China rivalry continues for chip dominance”, adding: “Maybe we have to wait and see if the upcoming launch of iPhone 15 helps to reignite consumer demand.”

In 2024, GDP growth is expected to improve to 2.5 per cent. Inflation is projected to ease to a headline rate of 3.1 per cent and core rate of 2.8 per cent.