Singapore economists lower growth forecasts to 3% for 2014, 3.1% for 2015: MAS survey

Singapore's economy watchers have tempered their expectations for GDP growth in 2014 from a quarter ago and are not expecting much improvement next year. Their inflation expectations too, have been adjusted lower.

The Monetary Authority of Singapore's (MAS) latest quarterly poll of professional forecasters, sent out in late November, found that their median growth forecast for 2014 has fallen to 3 per cent, from 3.3 per cent in the September survey. That is in line with the government's forecast of "around 3 per cent" growth for the year.

This came as the 22 respondents cut their forecasts for Q4 GDP to a median of 2.3 per cent growth, down from the previous survey's 3.1 per cent. Forecasts for the manufacturing, construction, wholesale and retail trade, and accommodation and food services sectors have all been cut from a quarter ago, though the economists expect the finance and insurance sector to grow a stronger 7.3 per cent.

For 2015, the respondents expect GDP growth to reach 3.1 per cent, just slightly above this year's expected 3 per cent growth rate. In fact, MAS' probability distribution of the responses shows that the most likely outcome is for the Singapore economy to slow to 2-2.9 per cent next year. That would fall in the lower half of the official 2-4 per cent growth forecast for 2015.

On the inflation front, market economists moderated their expectations further.

They now expect headline inflation of 1.1 per cent for 2014, down from 1.8 per cent a quarter ago. Core inflation, which strips out accommodation and private transport prices, is now tipped at 2 per cent, down from 2.2 per cent in the previous survey. Both these estimates are at the lower end of the government's forecasts of 1-1.5 per cent headline inflation and 2-2.5 per cent MAS core inflation for 2014.

For 2015, private sector forecasters are expecting core inflation of 1.9 per cent, which is beneath the government's 2-3 per cent forecast. Their median headline inflation forecast of 1.1 per cent falls within the government's projected 0.5-1.5 per cent range, which MAS says reflects the impact of muted housing rentals.