Economists Cut Singapore 2023 Growth Forecast, MAS Survey Shows

By Fabiana Negrin Ochoa

SINGAPORE--Experts surveyed by Singapore's central bank again cut projections for the country's economic growth this year, after the expansion recorded in the second quarter widely missed expectations.

The Southeast Asian city-state's 2023 gross domestic product growth is expected at 1.0%, according to the median projection of economists and analysts polled in August by the Monetary Authority of Singapore. That compared with the 1.4% forecast in the previous quarterly survey in June, which was lowered from 1.9% in the March survey.

"Spillovers from an external growth slowdown emerged as the most cited downside risk to the domestic outlook...and ranked as the top downside risk," the MAS said Wednesday. Respondents also flagged inflationary pressures and China's slowdown as risks to Singapore's growth outlook.

The forecasters see a deeper crunch in the manufacturing sector and in non-oil domestic exports in 2023. Their median forecast is for manufacturing to shrink by 4.4% versus the 1.3% contraction projected previously, and for NODX to contract by 10.5% compared with 5.5% before.

They cut growth forecasts for the finance and insurance sector to 0.7% from 1.3%, and for the construction sector to 6.8% from 7.0%. The rate of expansion in accommodation and food services was lowered to 8.8% from 10.0% in the June survey.

The outlook for the wholesale and retail trade sector brightened, with the respondents projecting growth of 1.3% instead of 0.8%.

Respondents were split on the third-quarter outlook for corporate earnings, with half seeing a year-over-year decline in profits and a third expecting them to be stable, the MAS said. Half of the forecasters also see residential property prices dropping in the quarter, while 33% forecast an increase, it said.

The median forecast for annual headline inflation was cut to 4.7% from 5.0%, while the core inflation view was held at 4.1%.

"The respondents project that 2023 CPI-all items inflation will most likely come in between 4.5% and 4.9%, from between 5.0% and 5.4% in June," the MAS said, with the core reading seen at between 4.0% and 4.4%, similar to the previous survey.

The exchange-rate forecast for end-2023 was lifted to 1.330 Singapore dollars per U.S. dollar from 1.320. None of the respondents expect changes to the Singapore dollar nominal effective exchange rate policy band, on which the MAS's monetary policy is centered, at its October review.

Next year, both headline and core inflation are expected to ease, and GDP is projected to expand, the latest survey showed. The 2024 headline inflation print is forecast at 3.1%, while core inflation is expected at 2.8% and GDP growth at 2.5%.

The MAS said it had 22 respondents in its latest survey, the results of which don't represent the central bank's own views or forecasts.

Write to Fabiana Negrin Ochoa at [e-mail]

(END) Dow Jones Newswires

09-06-23 0014ET