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SINGAPORE (Apr 26): MAS expects GDP growth to come in slightly above the mid-point of 1.3-3.5% forecast range in 2019, as growth momentum of the global economy has moderated at the turn of the year amid sluggish trade.
This was according to the Guide to the Macroeconomic Review April 2019, released by the Monetary Authority of Singapore’s (MAS) Economic Policy Group on Friday morning.
On the back of easing GDP growth, MAS has decided to maintain the current rate of appreciation of the SGD NEER policy band. This policy stance is consistent with a modest and gradual appreciation path of the SGD NEER policy band that will ensure medium‐term price stability.
MAS said global economic growth had somewhat weakened in 2018 and turned more uneven across the region. This worsened towards the end of 2018, fuelled by the US-China trade tensions which dampened global exports and weighed on business confidence and investment.
But even as growth in the trade‐related cluster decelerates, MAS expects pockets within the financial, business and ICT services sectors to continue to benefit from steady domestic demand in the region and increased investments in digitalisation.
"Meanwhile, domestic‐oriented sectors such as construction and consumer‐facing services are expected to stay on a recovery path,” says MAS.
MAS's forecast range for core inflation was also pushed down a notch to 1-2% in 2019 in the April 2019 monetary policy statement, compared to 1.5-2.5% previously.
In addition, domestic labour market conditions are expected to remain firm and will support moderate wage increases, such that unit labour costs should continue to rise. But with the positive output gap expected to be smaller in 2019 than the year before, consumer price inflation should remain in check.