MAS to retain status quo in October monetary policy: analyst

This is despite the shrink in economic growth.

The central bank is expected to maintain the status quo for the monetary policy meeting in October 2023 as the economic growth contracts, said Standard Chartered in a report.

Singapore’s economic growth shrunk 0.4% quarter-on-quarter in the first quarter of 2023 due to a weak manufacturing segment and global demand. 

Aside from this, the government’s economic growth forecast was at 0.5-2.5%, “with growth likely to come in around the mid-point.” 

With these factors, the analyst said they foresee “downside risk to our 2023 GDP growth forecast of 1.3% amidst poor Q1 performance and as the global economic outlook remains weak.”

Standard Charted also said it concurs with the “MTI’s view that US and euro-area growth may slow more significantly in the second half of 2023 amidst the lagged effects of monetary policy tightening and still-elevated inflation and that China’s recovery may not spill over to Singapore, as it is led by services consumption.” 

The economic developments being shown after the April monetary policy meeting seems to be similar to the central bank’s expectations.

“The growth downturn is widely expected and downside risks may have increased, with the MTI not ruling out some quarters of q/q contractions. Meanwhile, core inflation remains sticky, as reflected in the April inflation report,” said Standard Chartered.