SINGAPORE – Singapore’s economy will grow by 4 per cent next year, better than the 3.9 per cent expansion predicted earlier, according to a central bank survey of professional forecasters. Growth for the year will likely be driven by improvements in the construction sector as well as manufacturing and finance, the survey said.
Based on estimates by 22 economists and analysts, the quarterly survey conducted by the Monetary Authority of Singapore (MAS) showed the Republic likely registering growth between 3 per cent and 4.9 per cent next year.
The Ministry of Trade and Industry in its maiden forecast for next year last month said Singapore’s gross domestic product (GDP) will grow by 3 per cent to 5 per cent next year, after an estimated expansion this year of around 7 per cent – the most since 2010, when GDP grew by a record 14.5 per cent.
Respondents to the MAS survey, released on Wednesday (Dec 8), projected current year growth at 6.9 per cent, up from 6.6 per cent in the previous survey.
For next year, construction was seen as the sector that will expand the most.
The median forecasts for construction came at 15.8 per cent, followed by accommodation and food services at 9.6 per cent.
However, the estimate for construction was down from the 2021 forecast of 21 per cent.
More than half the respondents (57.1 per cent) saw the private residential property price index inching higher next year, while 83.3 per cent expected corporate profitability to rise next year.
Forecast for manufacturing growth came at 3.3 per cent for next year, slower than 11.4 per cent this year.
Growth in the finance and insurance sector will also slow down to 4.1 per cent next year, from 7.5 per cent this year.
The prospect of reopening borders to international travel emerged as the most frequently cited upside surprise to Singapore’s growth outlook and was identified by 77.8 per cent of the survey respondents.
They also flagged upside from a stronger-than-expected expansion in manufacturing output supported by robust global electronics demand, as well as from faster-than-expected global growth, driven for instance by trade and expansion in production capacity.
On downside risks to the growth outlook, a further deterioration in the Covid-19 situation, and an associated retightening in public health measures, was cited by 83.3 per cent of respondents.
In addition, respondents were concerned about downside risks from slowing growth in China.
Finally, half of the respondents also pointed to risks from faster-than-expected tightening in monetary policy by major central banks, arising, for instance, from a larger-than-expected pick-up in inflation.
The median of forecasts in the survey for Singapore’s all items consumer price index came at 2.1 per cent for next year, unchanged from the projection for this year.
The MAS core inflation was, however seen rising to 1.8 per cent next year, from 0.9 per cent this year.
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