Singapore’s economy is likely to expand at a quicker pace this year than previously expected, as faster growth in manufacturing, non-oil domestic exports and finance and insurance outweigh slower growth in areas such as private consumption, a central bank survey showed on Monday.
Gross domestic product is expected to grow 6.5% in 2021, according to the median projection of external professional forecasters in the Monetary Authority of Singapore’s June survey. That compares with the March survey’s forecast for a 5.8% expansion.
Economists raised their manufacturing growth forecast for 2021 to 8.3% from 4.7% and lifted their prediction for finance and insurance expansion to 6.0% from 5.8%. Non-oil domestic exports are expected to rise 7.5% in 2021, up from 6.9% forecast previously.
The median forecast for private consumption growth was lowered to 5.2% from 7.9%, while that for construction expansion was cut to 19.3% from 22.5%. The economists also reduced their growth estimate for wholesale and retail trade to 4.4% from 4.5% and for accommodation and food services to 6.5% from 11.0%.
The MAS said Monday that 24 economists and analysts responded to the latest quarterly survey, the results of which don’t represent the central bank’s views or forecasts.
A further deterioration in the Covid-19 situation and the associated re-tightening in public-health measures were the most-cited downside risk to Singapore’s growth outlook, as identified by respondents. In addition, respondents were concerned about geopolitical risks, including those stemming from U.S.-China tensions.
Effective containment of the pandemic again emerged as the most frequently cited upside risk to Singapore’s growth outlook. Also, respondents flagged stronger-than-expected performance in the manufacturing sector, driven in part by robust global demand for electronics, as an upside risk.
Singapore’s consumer-price index is expected to rise 1.4% this year, compared with the 0.9% increase forecast previously. Core CPI is likely to rise 0.8% this year, compared with the 0.7% gain predicted in the prior survey.
The U.S. dollar-Singapore dollar exchange rate is forecast at 1.3130 for end-2021, up from 1.3000 projected in the March survey. – (MarketWatch)