SINGAPORE (June 12): Concerns about escalating global trade protectionism continue to dominate the list of potential downside risks, reflecting recent developments in US-China relations.

The proportion of respondents who expect an escalation in trade frictions to present a downside risk also rose to 94.1%.

This according to the June survey of professional forecasters by the economic policy group of the Monetary Authority of Singapore (MAS) which was published on Wednesday.

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A sharper-than-expected slowdown in China also remained among the top downside scenarios, with the proportion of respondents who cited it remaining at around 53%.

In addition, respondents point to growing risks of a broader global economic downturn, with 29.4% citing it as a downside scenario, up from just 5.3%.

As in the March survey, a majority of respondents noted that an easing of trade tensions between China and the US could contribute towards a stronger-than-expected growth outturn for Singapore.

The proportion of respondents who identified this as an upside risk to their forecasts was 70.6%, slightly lower than in the previous survey.

The June 2019 Survey was sent out on May 21 to a total of 27 economists and analysts who closely monitor the Singapore economy.

MAS says the GDP growth in 1Q19 was weaker than expected

The Singapore economy expanded by 1.2% in the quarter compared with the same period last year. This was below the median forecast of 1.9% reported in the March survey.

In the latest survey, respondents expect GDP growth to come in at 2.1% in 2019, lower than the previous survey’s median forecast of 2.5%.

It is also expected to grow by between 2.0% and 2.4% this year, according to mean probability distribution.

They assigned a 33.9% probability to this range, up from 30.3% in the March survey.

However, they also assigned almost the same probability of 33.1% to the 1.5 to 1.9% range in the latest survey, which was an increase compared with March when the probability assigned was 13.6%.

The respondents expect GDP growth to pick up to 2.3% in 2020. As reflected by the mean probability distribution, the respondents estimate that the most likely growth outcome for the Singapore economy would be in the range of 2.0–2.4% next year. This is unchanged from the previous survey.

The respondents in the latest survey expect CPI-All Items inflation and MAS Core Inflation for 2Q19 to come in at 0.7% and 1.3%, respectively. The median CPI-All Items inflation for 2019 as a whole is forecast to be 0.9%, down from 1.1% in the March survey. In contrast, the forecast for MAS Core Inflation in 2019 is down to 1.4%, from 1.7%.

As for the labour market, the respondents expect the unemployment rate to be 2.2% at year-end, unchanged from the previous survey.