Experts surveyed by Singapore's central bank have once again revised down their projections for the country's economic growth this year. The second-quarter expansion fell well short of expectations, leading to a reduced outlook for 2023.

One of the main concerns cited by experts is the potential spillover effect from a global growth slowdown. This external risk is considered the biggest downside risk to Singapore's domestic economy. In addition, inflationary pressures and China's economic slowdown are also seen as risks to Singapore's growth prospects.

Looking at specific sectors, forecasters predict a more significant downturn in the manufacturing industry and non-oil domestic exports (NODX) for 2023. The median forecast is for manufacturing to contract by 4.4%, compared to the previously projected 1.3% contraction. Similarly, NODX is expected to decline by 10.5%, compared to the earlier estimate of 5.5%.

The finance and insurance sector is also expected to experience slower growth, with the forecast revised down to 0.7% from the initial projection of 1.3%. The construction sector has seen a small adjustment, with the growth rate lowered to 6.8% from 7.0%. Accommodation and food services have faced a more significant downgrade, with growth expectations reduced to 8.8% from the previous estimate of 10.0% in the June survey.

In contrast, the wholesale and retail trade sector is expected to fare better, with respondents projecting growth of 1.3%, an improvement from the initial forecast of 0.8%.

Overall, the latest survey reflects a more cautious outlook for Singapore's economy and highlights various risks that could potentially hinder its growth.

Third-Quarter Outlook for Corporate Earnings and Property Prices

In terms of residential property prices, the forecasters are similarly divided. Half of them predict a drop in prices for the quarter, while 33% anticipate an increase.

Inflation Forecasts

The median forecast for annual headline inflation has been revised downward to 4.7% from the previous estimate of 5.0%. However, the view on core inflation remains unchanged at 4.1%.

According to the MAS, the respondents project that the Consumer Price Index (CPI) for all items in 2023 will likely fall between 4.5% and 4.9%, compared to the previous range of 5.0% to 5.4% in June. The core inflation reading is expected to be between 4.0% and 4.4%, similar to the previous survey findings.

Exchange-Rate Forecast

The exchange-rate forecast for the end of 2023 has been revised upward to 1.330 Singapore dollars per U.S. dollar, compared to the previous estimate of 1.320.

Notably, none of the respondents anticipate any changes to the Singapore dollar nominal effective exchange rate policy band during the October review. This policy is central to the MAS's monetary policy approach.

Projections for Next Year

Looking ahead to next year, the survey results indicate expectations of easing inflation and GDP expansion. The forecast for headline inflation in 2024 stands at 3.1%, while core inflation is projected to be 2.8%. GDP growth is anticipated to reach 2.5%.

Survey Details

It is important to note that the MAS surveyed 22 respondents for this report. However, the results should not be interpreted as reflecting the central bank's own views or forecasts.

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