Market watchers are expecting Singapore’s economy to expand by 4.0% in 2022 better than the 3.9% predicted earlier, according to findings from the Monetary Authority of Singapore’s (MAS) survey of professional forecasters released on Dec 8.

Growth for the year will likely fall between the 3% and 4.9% next year, the quarterly survey went on to say. This is in line with the 3% to 5% growth rate pencilled by the Ministry of Trade and Industry (MTI) in its 2022 forecast released last month.

For the ongoing 4Q2021 ending in December, the 22 economists and analysts polled are looking at a 4.6% y-oy expansion. As for the full-year, they are looking at a growth rate of 6.9%, in line with official estimates which point to an expansion of between 6% and 7%.

On a sectoral basis, the market watchers are anticipating broad-based expansions in finance & insurance (+7.5%), construction (+21.0%), wholesale & retail trade (+4.2%) and non-oil domestic exports (+10.9%).

Conversely, they are looking moderate growth in manufacturing (+11.4%) and are slower rate of expansion in accommodation & food services (+3.1%) and private consumption (+4.8%), as these sectors have taken a hit from the pandemic.

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Given these movements, market watchers predict that the overall unemployment rate will hit 2.6% in 2021, easing slightly from the 2.7% predicted in the September survey.

Meanwhile, inflation concerns have picked up since September to 2.1% for headline inflation – the measure of total inflation – and 0.9% for core inflation – the price gauge excluding transport and accommodation costs.

This is down from the 1.7% for headline and 0.7% for core inflation that was predicted previously.

Come next year, headline inflation is forecast to come in at 2.1%, with respondents assigning the highest probability to the 2.0% to 2.4% range.

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In this time, core inflation is predicted to be 1.8%, for respondents have assigned the highest probability to the 1.5% to 1.9% range.

Against this backdrop, the respondents expect the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) to strengthen to $1.35 per USD against $1.33 forecast previously.

For now, it is hard say when Singapore’s economy will return to pre-Covid levels given the uncertainty in the global economy.

The tremors of the Covid-19 health-turned-economic crisis – unsurprisingly – topped the list of downside risks identified by the survey respondents. This is as any further waves of coronavirus infections will cause further disruptions to global supply chains, business operations, employment and even a re-tightening of safe management measures.

Slowing growth in China – the world’s second largest economy – was flagged as another concern.

Other concerns that come up was a faster-than-expected tightening in monetary policy by central banks arising possibly from a larger-than-expected pickup in inflation levels.

On the flipside, the respondents note that a re-opening of borders to international travel as well as faster-than-expected global growth – possibly driven by capex and trade - could boost Singapore’s economic growth.

Additionally, they note that robust electronics demand could potentially spur substantially higher output by the manufacturing sector.

Singapore's economy slated to grow by 4.0% in 2021: MAS survey

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