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Singapore economy now projected to grow by just 1.0% in 2023: MAS survey

The latest estimate stands lower than the previous forecast of 1.4% in the previous survey earlier this year in June.

Singapore’s gross domestic product (GDP) is now estimated to expand by 1.0% in 2023, according to the Monetary Authority of Singapore’s (MAS) September survey of professional forecasters.

The latest estimate stands lower than the previous forecast of 1.4% in the previous survey earlier this year in June.

This comes after the Singapore economy expanded by just0.5% y-o-y in 2Q2023, below respondents’ median forecast of 1.5% in the previous survey.

According to the 22 economists and analysts who responded to the survey, the most likely outcome is for the Singapore economy to grow by 0.0% to 0.9% in 2023 with an average probability of 45.5%.


This is 1 percentage point lower than the previous survey in which respondents assigned the highest probability to growth outturns between 1.0% to 1.9%.

In March, respondents assigned the likeliest outcome to the range of between 2.0% to 2.9% for the year.

In the current survey, respondents also expect Singapore’s economy to grow by 1.0% in 3Q2023. At the same time, they have projected Singapore’s CPI-All Items inflation, or headline inflation, and MAS Core Inflation to come in at 4.0% and 3.5% for the third quarter of 2023, respectively.

Their median forecast for headline inflation for the whole of 2023 is 4.7%, down from 5.0% in the June survey. Meanwhile, the median forecast for core inflation stands at 4.1%, unchanged from the survey in the previous quarter.

In the current survey, market watchers polled projected that headline inflation for 2023 will most likely come in between 4.5% and 5.9%, from between 5.0% and 5.4% in June. Core inflation is still expected to come in between 4.0% and 4.4%, similar to previous forecasts.

Within the labour market, the rate of unemployment is expected to come in at 2.0% at the end of 2023.

2024 estimates

Next year, respondents have kept to previous projections that Singapore’s GDP will expand by 2.5% with the most probable outcome for growth falling between 2.0% and 2.9%. The average probability assigned to the range is 38.9%, up slightly from 36.1% previously.

Meanwhile, headline inflation is forecast to come in at 3.1% in 2024 while core inflation is pegged to come in at 2.8%. Respondents assigned the highest probability to the 3.0 to 3.4% range for both headline and core inflation figures, similar to the June survey.

Corporate indicators still weak for 3Q2023

The latest survey also found that half of respondents expect corporate profits to decline y-o-y in the 3Q2023, while a third expects profits during the period to remain stable on a y-o-y basis.

At the same time, 50% of respondents anticipate that private residential property prices will increase in 3Q2023, compared to the 33% who expect a decline in property prices.

Additionally, 60% of respondents assessed that Singdollar (SGD) corporate bond spreads will widen in 3Q2023, while the remaining 40% are equally split on spreads narrowing or remaining stable.

For the whole of 2023, 67% of respondents expect corporate profitability to decline. Meanwhile, 57% of respondents expect private residential property prices to increase while 43% expect property prices to decline.

In addition, half of those surveyed expect corporate bond spreads to remain stable, while a third estimates that spreads will narrow.

For 2024, respondents were split on corporate profitability, with an equal proportion anticipating that profits will improve, remain stable or decline. Meanwhile, 43% of respondents anticipate private residential property prices remaining stable next year, with the remainder equally split — 29% each foresee either higher or declining property prices.

In addition, 40% of respondents expect corporate bond spreads to widen in 2024, with an equal number of respondents expecting spreads to remain stable.

Weak external growth drags on

As for risks to Singapore’s domestic outlook, spillovers from an external growth slowdown remained the most cited downside risk, identified by 69% of respondents, and was also most frequently ranked as the top downside risk.

In addition, respondents also flagged inflationary pressures and escalation in geopolitical tensions as risks to the domestic growth outlook, similar to the June survey.

Conversely, better-than-expected external growth was the most frequently cited upside risk to Singapore’s outlook, identified by 60% of respondents. It was also ranked as the top upside risk, with 40% of respondents indicating as such.

Respondents also flagged upside risks from more robust growth in China and tech cycle recovery, as they did in June.

Monetary policy moves ahead

None of the respondents have said that they expect changes to the slope, width and level at which the Singapore dollar nominal effective exchange rate (S$NEER) Policy Band is centred in the scheduled MAS review for next month in October.

Meanwhile, 28% of respondents anticipate a reduction in the slope of the S$NEER policy band in April next year and 5.6% of respondents expect MAS to lower the level at which the S$NEER policy band is centred.

For the October 2024 review, 17% of respondents anticipate a reduction in the slope of the S$NEER policy band.

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