Trade protectionism, China economy seen as increasingly risky to Singapore's GDP growth

Trade protectionism, China economy seen as increasingly risky to Singapore's GDP growth

By: 
Michelle Zhu
05/09/18, 12:00 pm

SINGAPORE (Sept 5): The Singapore economy is forecast to expand by 3.2% this year before growth eases to 2.7% in 2019, according to the latest survey of economists and analysts conducted by the Monetary Authority of Singapore (MAS).

Both full-year forecasts remain unchanged from the previous month’s survey, whose mean probability distribution reflected that the most likely outcome is for Singapore’s gross domestic product (GDP) to grow between 3-3.4% this year and within the range of 2.5-2.9% in the next year.

This comes after Singapore’s GDP expanded by 3.9% in 2Q18 compared with the same period last year, similar to the median forecast reported in MAS’s June survey.

In its Sept 2018 survey, MAS found that respondents assigned a 39.2% probability to their forecasted 2018 range, down 41.9% in the June survey, alongside an increase in the average probability assigned to the 3.5-3.9% range.

3Q y-o-y GDP growth is expected to come in at 2.1%, with CPI-all items inflation and MAS core inflation for the same period projected to come in at 0.8% and 1.9%, respectively.

The median CPI-all items inflation for 2018 as a whole is forecast to be 0.7%, which is down from 0.8% in the June survey. Meanwhile, the forecast for MAS core inflation this month rises to 1.7% from 1.6% previously.

On average, higher probabilities have been assigned to the ranges of 0.5-0.9% for 2018 CPI-all items inflation and 1.5-1.9% for MAS core inflation, respectively, in the latest survey.

Respondents expect the unemployment rate to come in at 2.1% by end-2018, unchanged from the previous survey.  

Going forward, CPI-all items inflation is projected to fall within the 1%-1.9% range in 2019, while MAS core inflation is expected to come in at 1.5-1.9%.

In its MAS Survey of Professional Forecasters: September 2018 report, MAS says its respondents have most commonly identified external growth, driven mainly by better performance in the US, as an upside risk for their views on the Singapore economy.

In contrast, a less-optimistic outlook of the domestic property market partly due to recent property cooling measures were identified as the most common downside risk, although 37% of all respondents believed the dissipation of trade tensions would remove uncertainty from the forecast horizon.

Trade protectionism nonetheless continues to weigh on the minds of 89% of the 23 respondents to the survey, with further escalation of trade rhetoric by the US and its trading partners, as well as the implementation of announced tariffs, causing concern.

MAS notes that a growing number of respondents have cited slower growth in China on the back of tightening credit conditions as a downside risk. While faster-than-expected rate hikes by the US Federal Reserve (Fed) continues to be a downside risk for a number of respondents, the proportion has fallen to 37% from 47% in the previous survey.

The authority also observes that an increasing number of respondents have flagged risks of weaker external growth in its recent survey, in line with tightening liquidity conditions in emerging markets (EMs).

Looking beyond quarterly fluctuations in ST Engineering’s growth story

SINGAPORE (Nov 17): ST Engineering’s latest third-quarter results have shown improvements in profitability in three of its four key business units of aerospace, electronics, land systems and marine. In addition to the main four, there is an “others” unit, which lumps together shared services, new ventures and other related activities. It reported a loss of $7.3 million. ST Engineering’s latest third-quarter results have shown improvements in profitability in almost all its business units. The marine unit, on the other hand, suffered a 35% y-o-y drop in earnings to $12.8 millio....
Read More >>

iFAST founder Lim confident China business will be exciting

SINGAPORE (Nov 16): Lim Chung Chun, chairman and CEO of iFAST Corp, believes long-term diversification is the best strategy to grow its assets under administration (AUA). Indeed, the company’s AUA has grown 18.7% y-o-y to hit a new record high of $8.5 billion as at Sept 30. Although the expansion of its unit trust platform into a wealth management solution distributing stocks, bonds, exchange-traded funds (ETFs) and insurance has been pretty successful, its geographical expansion into the mainland Chinese market for his B2B wealth management solutions hasn’t quite hit its marks yet. ....
Read More >>

How IoT in agriculture could present new opportunities for investors

SINGAPORE (Nov 16): Earlier this year, Avarga, formerly known as UPP Holdings, said it was acquiring a 23.08% stake in local start-up Archisen for up to $1.5 million in three separate tranches. Ian Tong, Avarga’s executive director, is on ­Archisen’s board. Tong is also the executive director of The Edge Media Group, which publishes The Edge Singapore. While indoor farming is not new, high-tech IoT-enabled farm Archisen is drawing on technical expertise from its partners to improve tis production within a controlled environment, shielded from the vagaries of weather that have t....
Read More >>
BMW charges up an 'electrified future'

Christopher Wehner, managing director of BMW Group Asia, explains how electric cars such as the BMW