SINGAPORE (Oct 30): Singapore’s economic growth will remain uneven through the end of the year, with weakness concentrated in trade and manufacturing, before halting its downtrend in 2020, the central bank said.

The city state’s prospects are in line with the path of the global economy, which should “stabilize” next year, the Monetary Authority of Singapore said in its Macroeconomic Review on Wednesday. The domestic economy “could experience fits and starts for the rest of the year, and into 2020,” the MAS said.

MAS Macroeconomic Review Forecasts

MAS Managing Director Ravi Menon said in an interview last week that the current cycle should bottom out toward the end of 2019 as the downturn appears to be confined to the trade and manufacturing sectors. The central bank elaborated on that view in its report on Wednesday, showing inflation will remain subdued while the labor market will soften.

The MAS, which uses the exchange rate as its main tool, eased policy in October for the first time since 2016. The move was a “measured adjustment” given that economic growth, business costs and consumer prices are expected to stabilize rather than decelerate further, the MAS said in its report.

A “more aggressive easing of policy is unwarranted at this juncture,” it said, although risks to growth and inflation are tilted to the downside. The MAS reiterated it’s prepared to adjust policy if the outlook weakens significantly.

The services industry remains resilient for now and will continue to be a key support for growth, the central bank said. The outlook for the trade sector is “uncertain,” with prospects also depending on a recovery in the global electronics cycle.

Singapore’s labor market has weakened and wage growth will likely slow into next year, the central bank said. The latest data show retrenchments are on the rise, companies are cautious about raising wages, and unemployed people are taking more time to find new work.

“Hiring sentiment has become more restrained amid the economic slowdown,” according to the report. “Looking ahead, domestic wage growth should ease as the labor market softens, even while sluggish demand could limit the pass-through of cost increases to consumers.”