Economists temper Singapore growth expectations for 2016 to 1.9%

PRIVATE-SECTOR economists polled by the Monetary Authority of Singapore (MAS) have again trimmed their growth forecast for this year. They now expect gross domestic product (GDP) to expand 1.9 per cent - a step down from their previous estimate of 2.2 per cent.

They expect the economy to fare better in 2017, however, with 2.5 per cent growth.

The central bank's quarterly poll was sent out on Feb 24, and received views from 24 respondents.

The 2016 median forecasts pencil in a deeper-than-thought contraction in the manufacturing sector of 2.7 per cent (versus -1.2 per cent earlier), and slower growth in the finance & insurance sector of 3.6 per cent (compared with 5.9 per cent).

Construction as well as accommodation and food services, however, are expected to do better than previously anticipated, with growth of 2.6 per cent and 1.6 per cent respectively (compared with 1.2 per cent and 0.8 per cent before).

Respondents continue to forecast the unemployment rate to be at 2.1 per cent by year-end.

On the inflation front, economists pared down their forecasts too. In the December survey, 2016 headline inflation was expected at 0.5 per cent; it is now projected to come in at -0.2 per cent.

Core inflation - which strips out the costs of accommodation and private road transport - is seen at 0.8 per cent (versus 1 per cent a quarter ago).

For 2017, economists expect headline and core inflation to come in at 1 per cent and 1.5 per cent respectively.