Singapore GDP growth predicted to hover at 2-4% in 2014

Government maintains cautious stance.

According to CIMB, rather than a “normal year” growth forecast of 3-5%, MTI remains cautious on 2014 growth prospects. It forecasts 2014 GDP growth of 2-4%.

Here's more from CIMB:

The uneven OECD and China growth rates are risks to our heavily export-dependent sectors, such as manufacturing, wholesale trade and transportation and storage.

Uncertainties remain over how global financial markets will react to another US fiscal impasse or the Federal Reserve cutting back its quantitative easing programme. The eurozone may be emerging from a recession next year but the labour market is still very weak.

Within Singapore, the MTI says “some labour-intensive domestically-oriented sectors may see their growth prospects contained by continued tightness in the labour market”, unless the productivity of the local workforce continues to improve.

On this front, it is encouraging to note overall labour productivity grew 1.6% yoy in 3Q13 vs. 2Q13’s +0.2% and 1Q13’s -3.6% (2012: -2.6%).

While Europe may continue to threaten the global economy, we are comforted by the general calmness in global inter-bank markets, supported by global central banks. This should limit financial-linkage disruptions in the region.

We are also encouraged by the latest US labour report showing broad-based hiring in October, suggesting that the US is almost back on the path of sustainable growth. Another silver lining is that Asia’s growth may have stabilised now that China, the region’s bedrock, may grow in a steadier manner in 2014.

Given that Singapore is the hub of the regional economy, we expect broad-based growth of “about 5%” given the known (and hopefully receding!) risks.