Singapore’s gross domestic product (GDP) is tipped to expand by 3.8% in 2022, according to market watchers in the Monetary Authority of Singapore’s (MAS) June survey of professional forecasters.
The estimate is down 0.2 percentage points from the 4.0% previously estimated in March, but still within the 3.0% to 5.0% range estimated by the Ministry of Trade and Industry (MTI).
According to the 24 economists and analysts who responded to the survey, the most likely outcome is for the Singapore economy to grow by 3.0% to 3.9% in 2022 with an average probability of 43.6%.
In the previous survey, respondents assigned the highest probability to growth outturns between 3.0 and 4.9%, encompassing two ranges.
On May 25, the MTI announced that the Singapore economy grew by 3.7% y-o-y in the 1Q2022, moderating from the 6.1% expansion in the previous quarter.
The growth stood in line with the respondents’ median forecast in the previous survey.
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In the current survey, respondents say they expect the economy to grow by 4.8% in the 2Q2022.
On a sectoral basis, the market watchers are anticipating broad-based expansions across all the sectors, including Singapore’s non-oil domestic exports at +6.3%, albeit down from the 7.8% estimated in the previous survey.
Core inflation predicted to expand by 3.4% in 2022
CPI-All Items inflation and MAS core inflation in the 2Q2022 are expected to come in at a respective 5.4% and 3.5% in the 2Q2022.
For the full year, the median CPI-All Items inflation is forecast to come in at 5.0%, up from the 3.6% pencilled in the March survey.
MAS core inflation is expected to come around 3.4% for the full year, up from the previous estimate of 2.0%.
The respondents project that 2022 CPI-All Items inflation will most likely come in between 4.5% and 5.4%, encompassing two probability ranges. Respondents had assigned the highest probability to the 3.5 to 3.9% range in the previous survey. Meanwhile, respondents in the current survey expect MAS Core Inflation to come in between 3.0 and 3.9%, also encompassing two probability ranges.
Against this backdrop, the respondents expect the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) to strengthen to $1.36 per USD against the previous $1.33 forecast.
The three-month Singapore Interbank Offered Rate (SIBOR) is also expected to grow to 2.30% per annum, up from the 1.09% in the previous March survey.
For the labour market, the respondents expect Singapore’s unemployment rate to reach 2.1% as at the end of the year.
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GDP to expand by 3.0% in 2023
In the same survey, the respondents expect Singapore’s GDP to expand by 3.0% in 2023, unchanged from that of the estimates in March.
This time, the economists see the expansion as having an average probability of 37.1% to the likelihood of growth falling between 3.0 and 3.9%.
Both CPI-All Items and MAS core inflation are expected to ease in 2023, with CPI-All Items inflation forecast at 3.0% in 2023. MAS Core inflation is expected to come in at 2.8% in 2023.
Respondents assigned the highest probability to the 3.0 to 3.9% probability ranges for CPI-All Items inflation, and to the 2.5 to 3.4% ranges for MAS Core inflation.
Corporate profits to increase y-o-y in 2Q2022
Of the respondents who shared their inputs, 55.6% of them are expecting to see a y-o-y growth in corporate profits in the 2Q2022.
One-third of the respondents are expecting to see a y-o-y decline, while the remainder believe profits will be stable.
Meanwhile, 70% of respondents believe that private residential properties will see a q-o-q increase in prices in the 2Q2022, while the remaining 30% expect prices to remain stable.
At the same time, 44.4% of the respondents believe that SGD corporate bond spreads will widen in 2Q2022, one-third expect they will be stable, and the remainder expect spreads to narrow.
Tighter global financial conditions, spillovers from weakening economic activity to potentially weigh on Singapore’s financial market and lending conditions
Among the respondents polled, most see tighter global financial conditions, spillovers from weakening economic activity and financial markets in China, an escalation in geopolitical tensions, and a stronger S$NEER as the top factors that could potentially weigh on the financial market and lending conditions in Singapore.
Most of the market watchers have also identified a slower-than-expected pace of monetary policy tightening among major central banks as an upside driver of domestic financial market and lending conditions. In addition, respondents flagged easing geopolitical tensions, firmer growth in China and a weaker S$NEER as potential upside drivers.
According to the respondents, risks to the outlook of Singapore’s economy include a sharper-than-expected rise in inflation, slower economic activity in China, as well as weaker-than-expected global growth driven in part by major economies like the US and Eurozone.
Meanwhile, stronger growth from China was the most frequently cited upside risk to Singapore’s growth outlook. Other upside risks include the accelerated revival in travel and tourism and a stronger-than-expected expansion in manufacturing output.
