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Quick takes: Singapore's economic outlook in 2014 and 2015

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THE Singapore government said Tuesday morning that the economy grew 2.8 per cent year-on-year in Q3, thanks to both the manufacturing and services sectors. This was better than the 2.4 per cent flash estimate and market expectations for a slight upgrade to 2.5 per cent.

THE Singapore government said Tuesday morning that the economy grew 2.8 per cent year-on-year in Q3, thanks to both the manufacturing and services sectors. This was better than the 2.4 per cent flash estimate and market expectations for a slight upgrade to 2.5 per cent.

The Ministry of Trade and Industry (MTI) also narrowed its GDP growth forecast for 2014 to 3 per cent, from a range of 2.5-3.5 per cent, and announced its growth forecast for 2015: 2-4 per cent. MTI expects the pace of global recovery to remain uneven and the domestic labour market to remain tight. The ministry also flagged risks of a deflationary spiral in the eurozone, uncertainties over US rate hikes and a sharp correction to China's property market.

Here's what private-sector economists had to say.

Mizuho Bank economist Vishnu Varathan sees a glass half-full:

"Any exuberance that could have resulted from the upside surprise in Q3 GDP data was, however, dampened by a rather tentative outlook by the Ministry of Trade and Industry (MTI).... We fully agree on the nature of the risks, but take a 'half-full' view instead. We think that China, eurozone and Japan stimulus will lead to slightly more support than expected. Upshot: uneven and uncertain, but not unduly gloomy."

Bank of America Merrill Lynch economist Chua Hak Bin is more cautious:

"We are more cautious, pencilling in slightly weaker growth at 2.8 per cent in 2015, given ongoing restructuring and tight labour constraints. Productivity growth has been slow to deliver. Restructuring is impacting manufacturing and exports disproportionately, especially labour-intensive industries, and accelerating the shift towards a more services-based economy."

Citi economist Kit Wei Zheng notes that monetary policy is unlikely to change till the second half of 2015:

"Despite deepening disinflation, the unchanged official outlook for growth in 2015 supports the Monetary Authority of Singapore's comments that the policy stance remains 'appropriate'.... Easing (of monetary policy) will hinge on significant downside surprises in growth, core inflation and cracks in the jobs market."