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SINGAPORE'S growth prospects have improved from the last quarter as its economy entered 2017 with a positive momentum, said ICAEW (Institute of Chartered Accountants in England and Wales) on Wednesday.
In view of this, ICAEW has raised its growth forecast for Singapore's economy this year to 2.4 per cent on the back of export recovery and ongoing demand for exports as shown by manufacturing purchasing managers' index numbers.
The quarterly forecast report, titled Economic Insights: South East Asia, said there are tentative signs that the business investment may start to recover.
It said: "Prospects of further rate hikes in the US, and therefore domestic interest rates, could snuff out any recovery in business investment before it gathers traction.
"Nonetheless, investment is likely to be a lesser drag on growth this year, as government spending picks up. Fiscal spending is forecast to be mildly stimulatory following the announcement that a number of infrastructure projects will be brought forward."
The recent easing in housing restrictions should also aid the struggling housing sector, but it will take some time to unwind the large oversupply. Thus, the current correction in the housing market is still expected to dampen growth this year, it said.
"A combination of negative wealth effects, associated with falling house prices and a weaker labour market, have taken their toll on household spending," the report said.
It expects employment conditions to improve in 2017 as the drag from sharp retrenchment in financial services and oil and gas-related sectors begins to ease.
"However, growth in private consumption is still forecast to remain relatively subdued, with slower wage growth and higher inflation weighing on real earnings," it noted.