Singapore's 2018 economic growth forecast raised by 1 ppt to 3.3%: MAS survey

Economists think that manufacturing growth in 2018 will slow down to 7.4% from an earlier prediction of 7.6%.

Singapore’s gross domestic product could hit 3.3%, up 1 ppt from the projected 3.2% growth in September, according to a survey by the Monetary Authority Singapore (MAS).

According to the survey, Q3 GDP was recorded at 2.2%, 0.1 ppt higher than the September survey prediction of 2.1%.

For Q3, the newly released survey predicts that the growth of the manufacturing sector could slow down from the predicted 7.6% to 7.4% for 2018.

Respondents comprising of economists from the private sector think that the manufacturing growth will slow down to 7.4% in 2018, which is down from their 7.6% growth prediction in the September survey. Meanwhile, economists are more positive with the financial & insurance industry as they predict that the sector’s growth will hit 6.9% in 2018 from their previous growth prediction of 6.7%.

The construction sector is expected to see a lesser contraction of -3.5% from the previous forecast of -4.2% in the September survey. Meanwhile, growth in the wholesale & retail trade is forecasted to hit 1.3% (vs. 1.5% in the September survey) whilst the accomodation and food services sector is expected to grow by 3.4% (vs. 2.9% in the September survey.

According to the December survey by MAS, economists are more positive on the private consumption as they think growth will reach 3.4%, up from their 2.8% prediction in September. They are also positive on the non-oil domestic exports (NODX) as they expect growth to reach 6.2% compared to their 5% prediction in the September survey.

Respondents of the survey think that the easing of the trade tensions (47%) is the top upside risk for Singapore’s economy. They also think other upside risks which may buoy the economy include the US monetary policy (29%) and regional trade and investment (29%).

Meanwhile, all respondents think that the major downside risk to the economy is trade protectionism. They also believe that the higher interest rates (41%) as well as China’s slowdown (41%) could dent Singapore’s economy.