GDP may grow 1-2% in 2020: OCBC

This will hinge on MAS easing its monetary policy stance.

Singapore’s GDP is expected to remain unchanged at around 0.4% YoY for 2019 with a lacklustre Q4 performance, but may see a modest growth to 1-2% in the following year, according to OCBC Treasury Research.

This is based on assumptions that global trade tensions do not escalate, manufacturing and trade stabilises, and MAS easing its monetary policy stance by reducing the slope of the SGD NEER policy band from about +1.00% p.a. appreciation path to +0.50% p.a.

“While the risk of a more dovish move to a zero rate of appreciation cannot be fully discounted... we think this drastic step may not be warranted for now as it would imply an official economic prognosis that is considerably worse than currently expected or a prediction of rapid deterioration from here,” OCBC head of strategy and research Selena Ling wrote.

OCBC added that a more expansionary budget for FY 2020 may provide buffer for downside growth risks.

The country escaped a technical recession with a 0.1% YoY and 0.6% QoQ growth in Q3, although slightly lower than OCBC’s forecasts of 0.3% and 1.9% respectively.