Economic outlook for Singapore & region seen as rosy this year: ACCA

Economic outlook for Singapore & region seen as rosy this year: ACCA

Michelle Zhu
01/02/18, 04:05 pm

SINGAPORE (Feb 1): Economic confidence in Asia Pacific remained high relative to the past few years despite a dip in 4Q17 on the recent cooling of China’s economic activity, according to the Association of Chartered Certified Accountants (ACCA).

In its Global economic conditions survey final report: Q4, 2017, the global body for professional accountants attributes China’s drop in confidence to a new determination by policymakers to consider the risks of continued rapid credit growth to the broader financial system.

“We can all worry about a potential hard landing in China, but before anything like that happens, there’s a huge amount of underlying cyclical stories that are going up and down,” comments Claus Vistesen, Chief Eurozone Economist, Pantheon Macroeconomics.

“For example, we are seeing a focus away from GDP targeting to a more balanced growth trajectory. It’s a story that suggests that headline manufacturing and data could be weaker than the market expects.”

ACCA nevertheless notes that the rest of the region has continued to do very well over the latest quarter, with trade-dependent economies including Singapore all growing at, or close to, multi-year highs.

In the association’s view, all of Asia Pacific’s main subcomponents are looking reasonably stable as the government spending component appears to be firmly in positive territory, while the capital spending and employment sub-components continue to hover below zero.  

ACCA particularly notes that the fortunes of these same open and trade-dependent economies – such as Singapore and Malaysia, are largely determined by the performance of the global economy – which the association believes is set to hold up reasonably well.

Andrew Kenningham, Senior International Economist, Capital Economics, is especially optimistic on the US economy for 2018.

The economist is forecasting for 2.5% inflation in 2018 and just 2% in 2019, with expectations of growth picking up to 2.2% in 2018 compared to just over 1.5% in 2017 on the anticipated fading of the squeeze on household incomes.

“In terms of the countries that matter to the global economy, particularly the US and the Eurozone, the environment looks pretty solid,” states Dario Perkins, Managing Director, Global Macro, TS Lombard.

Like ACCA, Lombard believes the outlook for 2018 remains promising.

“As an economist, you worry about debt and sustainability of growth. But as long as it’s effectively state-owned banks lending to state-owned enterprises, it’s hard to see why this would turn into some kind of debt crisis,” he says.

“So you end up with what becomes a long-term growth problem, but I don’t think that’s a story for 2018.”

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