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Economists expect Singapore's GDP to grow by 1.4% in 2023: MAS survey

Bryan Wu
Bryan Wu • 4 min read
Economists expect Singapore's GDP to grow by 1.4% in 2023: MAS survey
In the current survey, respondents also expect Singapore’s economy to grow by 1.5% in 2Q2023. Photo: The Edge Singapore
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Singapore’s gross domestic product (GDP) is estimated to expand by 1.4% in 2023, according to the Monetary Authority of Singapore’s (MAS) June survey of professional forecasters.

The latest estimate stands lower than the previous forecast of 1.9% in the previous survey earlier this year in March.

According to the 26 economists and analysts who responded to the survey, the most likely outcome is for the Singapore economy to grow by 1.0% to 1.9% in 2023 with an average probability of 45.5%.

This is 1 percentage point lower than the previous survey in which respondents assigned the highest probability to growth outturns between 2.0% to 2.9%.

In the current survey, respondents also expect Singapore’s economy to grow by 1.5% in 2Q2023. At the same time, they have projected Singapore’s CPI-All Items inflation, or headline inflation, and MAS Core Inflation to come in at 5.2% and 4.6% for the second quarter of 2023, respectively.

Their median forecasts for headline and core inflation for the whole of 2023 stand at 5.0% and 4.1%, respectively, unchanged from the March survey.

See also: Singapore keeps 2024 GDP growth forecast at 1% to 3%; expects gradual manufacturing and trade recovery

In the current survey, market watchers polled projected that headline inflation for 2023 will most likely come in between 5.0% and 5.4%, from between 4.5% and 5.9% in March. Core inflation is still expected to come in between 4.0% and 4.4%, similar to previous forecasts.

Within the labour market, the rate of unemployment is expected to come in at 2.1% at the end of 2023.

2024 estimates

See also: Another possible delisting hastens calls for SGX revival

Next year, respondents have kept to March projections that Singapore’s GDP will expand by 2.5% with the most probable outcome for growth falling between 2.0% and 2.9%. The average probability assigned to the range is 36.1%, up slightly from 33.2% previously.

Headline inflation is forecast to come in at 3.3% in 2024 while core inflation is pegged to come in at 3.0%. Respondents assigned the highest probability to the 3.0 to 3.4% range for both headline and core inflation figures, similar to the March survey.

Corporate profits expected to decline in 2Q2023

June’s survey also found that 67% of respondents expect corporate profits to decline y-o-y in the 2Q2023, while 22% of respondents expect profits during the period to remain stable on a y-o-y basis.

At the same time, 44% of respondents anticipate that private residential property prices will increase in 2Q2023, compared to 33% of respondents who expect a decline in property prices.

Additionally, 63% of respondents assessed that Singdollar (SGD) corporate bond spreads will either remain stable in 2Q2023, while 25% of respondents expect spreads to widen.

For the whole of 2023, 78% of respondents expect corporate profitability to decline. Meanwhile, 50% of respondents expect private residential property prices to increase while 30% expect property prices to decline.

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In addition, 56% expect corporate bond spreads to remain stable, while another 33% estimate that spreads will widen.

For 2024, respondents were split on corporate profitability, with an equal number of 38% each anticipating profits to improve or decline. Meanwhile, 44% of respondents anticipate private residential property prices to increase and an equal number foresee stable prices.

In addition, 38% of respondents expect corporate bond spreads to widen in 2024, with an equal number of respondents expecting spreads to remain stable.

Tighter financial conditions to continue

For Singapore’s domestic outlook, spillovers from an external growth slowdown emerged as the most cited downside risk, identified by 61% of respondents. It was also most frequently ranked as the top downside risk, with 28% of respondents doing so.

In addition, respondents also flagged inflationary pressures and escalation in geopolitical tensions as risks to the domestic growth outlook.

On the other hand, more robust growth in China, underpinned by its economic reopening and macroeconomic policy easing, was identified by 71% of respondents, the most frequently cited upside risk to Singapore’s growth outlook

It was also most frequently ranked as the top upside risk, with 29% of respondents doing so. Respondents also flagged upside risks from better-than-expected external economic growth and tech cycle recovery.

Globally, respondents cited that tighter global financial conditions elevated inflation could continue to weigh on the financial market and lending conditions in Singapore, with pressures not easing entirely since the March survey.

Meanwhile, most respondents identified less restrictive global financial conditions, including rate cuts by central banks, as an upside driver of the domestic financial market and lending conditions.

Respondents also listed capital inflows into Singapore and the easing of inflation as other potential upside drivers.

Singapore's monetary policy

None of the respondents have said that they expect changes to the slope, width and level at which the Singapore dollar nominal effective exchange rate (S$NEER) Policy Band is centred in the scheduled MAS review for October.

Meanwhile, 26% of respondents anticipate a reduction in the slope of the S$NEER policy band in April 2024 and 5% of respondents expect MAS to lower the level at which the S$NEER policy band is centred.

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