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Singapore economy forecast to contract 6% in 2020: MAS survey of economists

Staff Writer, Singapore
·Editorial Team
·2-min read
A general view shows the Singapore skyline behind the Merlion park on May 15, 2020. (Photo by Roslan RAHMAN / AFP) (Photo by ROSLAN RAHMAN/AFP via Getty Images)
Singapore skyline behind the Merlion park, 15 May 2020. (PHOTO: ROSLAN RAHMAN/AFP via Getty Images)

SINGAPORE — Singapore’s economy is expected to shrink by 6 per cent in 2020 due mainly to the severe impact of the COVID-19 pandemic, according to a survey by the Monetary Authority of Singapore (MAS) released on Monday (7 September).

The latest MAS quarterly survey of professional forecasters reflected the views of 26 economists and analysts. Singapore’s full-year gross domestic product (GDP) forecast is lower than the 5.8 per cent contraction projected in the previous MAS survey in June.

The respondents cited a further deterioration in the COVID-19 situation due to further waves of outbreaks or delays in vaccine development as the main downside risks to Singapore’s growth outlook. The next biggest potential risks cited by them are an escalation in US-China trade tensions and a slower-than-expected global economic recovery.

Singapore’s GDP is expected to rebound next year and grow by 5.5 per cent, according to the survey.

In the current survey, the respondents expect the economy to contract by 7.6 per cent year-on-year in the third quarter. The economy contracted by 13.2 per cent in the second quarter compared with the same period last year, larger than the respondents’ forecast of a 11.8 per cent decline in the previous survey.

Among the outlook of the key sectors for this year, manufacturing is expected to grow 2.3 per cent while finance & insurance is forecast to expand 4.9 per cent. On the other hand, three other sectors are projected to decline, with construction, wholesale & trade, and accommodation & food services falling by 23 per cent, 6.4 per cent and 29.1 per cent respectively.

Private consumption is seen falling 11.8 per cent while non-oil domestic exports are forecast to rise 4.5 percent in 2020.

All the respondents expect corporate profitability to decline this year. Two-thirds of the respondents believe private residential property prices will decline, while half of those surveyed project that Singapore dollar corporate bond spreads will remain stable.

As for the labour market, the respondents expect the unemployment rate to be 3.5 per cent at year-end.

The respondents forecast a -0.4 per cent for headline inflation while core inflation is expected to be -0.3 per cent this year.

The survey was sent out on 12 August and doesn’t represent the views or forecasts of the MAS.

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