Economists bumped up their 2022 inflation forecast for Singapore by 1.6 percentage point, amid a potential threat to food supply chains.
Headline inflation rate is seen rising 5.5% on average in the current quarter and the next, up from less than 4% seen previously, according to the median of a Bloomberg survey this month. That led to revision of the 2022 forecast to 4.9%, up 1.6 percentage point, while core inflation is seen coming in 3.4% from 2.7% in the February survey.
Expectations of price gains in 2023 and 2024 were also revised upwards to 2.8% and 2.1%, respectively, the same poll showed.
“Lingering supply chain issues and export bans have increased uncertainty on food security,” said Jeff Ng, senior economist at MUFG Bank in Singapore, referring to the city-state’s reliance on food imports. He sees annual headline inflation surpassing the 2011 rate of 5.2%, but short of 2008’s 6.6% peak.
Economists also cut their growth forecasts through the first quarter of next year, before seeing improvement in the second- and third-quarters of 2023, the same poll showed. Gross domestic product will probably expand 4.6% in the current quarter, down from 5.6% predicted previously. The full-year forecast was lowered by 0.2 percentage point to 3.8%, a pace that matches the Ministry of Trade & Industry’s forecast of 3-5%.
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The growth outlook for 2023 and 2024 remain unchanged at 3% and 2.7%, respectively.
“We think global headwinds will overwhelm and dampen the reopening tailwind,” Maybank Kim Eng’s economists Chua Hak Bin and Lee Ju Ye said in a report to clients dated May 25. They maintain their below-consensus growth forecast of 2.8% for this year.
