Economists raise Singapore’s growth forecast, lower inflation projections in latest MAS survey
More now see the central bank tightening policy in October, though a slight majority still expect it to hold
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[SINGAPORE] Private-sector economists have raised their growth projections, based on the Monetary Authority of Singapore’s (MAS) latest quarterly survey of professional forecasters released on Wednesday (Sep 2).
Most respondents still expect no immediate change in monetary policy – but expectations have shifted further towards tightening.
The median forecast for 2026 full-year growth increased to 5 per cent in the September poll, from 3.5 per cent in June.
The new estimate is close to the upper end of the official forecast range of 4.5 to 5.5 per cent, which was revised upwards from 2 to 4 per cent in August following a stronger-than-expected performance in the first half of the year.
As for 2027, gross domestic product is now predicted to expand by 3.1 per cent.
The latest survey was sent to 25 professional forecasters on Aug 11 and received 21 responses. The survey reflects their views and not those of MAS.
September’s 2026 growth upgrade reflects higher growth expectations across most sectors.
Manufacturing is now expected to grow 8.4 per cent on year, up from 5 per cent in the June survey.
Finance and insurance are projected to increase 5.4 per cent, up from 4.5 per cent in June.
Construction is anticipated to climb 7.1 per cent in September’s poll, up from 6.5 per cent previously.
Wholesale and retail trade are forecast to grow 7.4 per cent in the latest survey, up from 4.9 per cent in the June edition.
The forecast was only lower for accommodation and food services in the survey’s breakdown. Economists now expect it to grow 1 per cent, down from 1.8 per cent in the previous survey.
Overall GDP also includes other sectors for which breakdowns are not provided, such as transport and storage as well as professional services.
In Q2, GDP growth was 5.9 per cent, exceeding the median expectation of 4.3 per cent in the previous survey.
For Q3, the economists expect the economy to grow 4.6 per cent.
In line with higher expectations for manufacturing, the full-year 2026 growth forecast for non-oil domestic exports surged to 17 per cent, from 6.1 per cent before.
Meanwhile, full-year median forecasts were lowered for both headline and core inflation in the latest survey.
Private-sector economists’ estimate came in at 2.1 per cent growth for headline inflation, down from 2.3 per cent; and 1.9 per cent for core inflation, down from 2 per cent in the previous round.
These fall within the authorities’ 1.5 to 2.5 per cent forecast range for both headline and core inflation.
In Q2, headline inflation was 1.8 per cent, lower than the median forecast of 2.1 per cent in the previous poll. Core inflation, at 1.5 per cent, was slightly below June’s expectations for the quarter, at 1.6 per cent.
For Q3, economists project that headline and core inflation will reach 2.5 per cent and 2.4 per cent, respectively.
The expected overall unemployment rate for the year remains at 2.1 per cent.
Monetary policy shifts
A majority of respondents still expect MAS to keep monetary policy settings unchanged in October, but a larger share is now predicting a tightening move.
In the September survey, 45 per cent of respondents expect the central bank to tighten policy in October by increasing the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. This is up from 30 per cent in the previous poll.
The remainder expect no change in the slope of the band.
In contrast, one respondent expects MAS to ease policy by lowering the level at which the S$NEER is centred in October’s meeting. In the previous survey, no respondents expected this level to be changed.
No economists predict any change to the width of the band.
Expectations of tightening via a slope steepening have also increased for the January 2027 meeting, with one respondent now anticipating this move, up from none in the previous survey.
For the January meeting, no economists expect any changes to the midpoint or the width of the band.
At its last meeting in July, the central bank increased the rate of appreciation of the S$NEER policy band “very slightly”, in a smaller move than April’s steepening. This defied expectations of a hold.
It also marked its second tightening since October 2022.
Before the April meeting, MAS had held its settings steady since July 2025, after two consecutive easing moves in January and April 2025.
A prolonged or escalating conflict in the Middle East was the most cited downside risk to Singapore’s economic outlook, by 70.6 per cent of respondents – though this was lower than 85 per cent in June.
It was also cited as the top risk by 47.1 per cent of respondents.
The bursting of the artificial intelligence bubble was the next most cited risk at 64.7 per cent, higher than 60 per cent in June.
Other geopolitical tensions, such as trade tensions, was cited as a downside risk by 41.2 per cent of respondents, up from 35 per cent in June. Just 5.9 per cent flagged it as the top downside risk.
For upside risks to Singapore’s outlook, a sustained AI-driven upturn in the tech cycle was most cited. All respondents pointed to it – the same as in June. All respondents also placed it as the top upside risk.
De-escalation or resolution in the Middle East conflict was the next most cited upside risk, raised by 35.5 per cent of those surveyed, though this was lower than June’s 55 per cent.
This was followed by stronger-than-expected global or external growth at 29.4 per cent, up from 20 per cent in June.
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