- POSTED: 11 Dec 2013 12:47
- UPDATED: 11 Dec 2013 23:49
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Private sector economists are now more optimistic about Singapore's economic performance this year. According to the MAS's latest Survey of Professional Forecasters, they expect Singapore's GDP to grow by 4.7 per cent in Q4.
SINGAPORE: Private sector economists are now more optimistic about Singapore's economic performance this year.
According to the Monetary Authority of Singapore's (MAS) latest Survey of Professional Forecasters released on Wednesday, they expect Singapore's GDP to grow by 4.7 per cent in Q4, up from 3.4 per cent in the September survey.
Economists have also revised their growth forecast for 2013 to 3.8 per cent, up from 2.9 per cent previously.
Private sector economists said the Singapore economy should do better this year, supported by stronger performance in the manufacturing and construction sectors, as well as wholesale and retail trade.
They have also upgraded their growth forecast on the back of better-than-expected growth in the third quarter.
The Singapore economy expanded by 5.8 per cent in Q3 2013 compared with the same period last year, higher than the expected 4.0 per cent.
The growth expectations are in line with the government's 2013 full year growth forecast of 3.5 to 4.0 per cent.
Going into 2014, economists have also raised the GDP forecast to 3.9 per cent from 3.5 per cent in the last survey.
However, amid the optimism, some economists warn there are potential risks ahead.
Irvin Seah, senior economist and senior vice-president for economic and currency research, said: "China's growth momentum has picked up, and I think that will be a significant impetus on Singapore's economic performance in 2014.
“It will be an important catalyst for the manufacturing sector, for the services sector, some of the trade-dependent sectors.
“That being said, there are also risks particularly in the form of QE tapering, which will be a concern for the financial markets especially for investors."
Meanwhile, inflation for 2013 could ease slightly with more stable housing costs.
Economists expect headline inflation to fall to 2.4 per cent this year.
And MAS core inflation, which excludes housing and private transportation costs, is projected to come in at 1.7 per cent.
But rising business costs could exert some inflationary pressure going forward.
Joey Chew, regional economist at Barclays, said: "Growth is picking up so we should see a stronger labour market interact with stronger demand for labour, pushing up wages, and therefore prices.
“We should also expect pent-up cost increases, like public transport costs to also filter through now that the economy is doing better.
“Why we should expect inflation to rise is also because some of the commodity prices globally has bottomed out. For example, we've seen electricity tariffs in Q4 being revised up, and we should also see oil prices moving a little higher in 2014."
Economists said core inflation for 2014 could rise to 2.3 per cent, up from their earlier forecast of 2.1 per cent.
But headline inflation could dip slightly to 2.8 per cent next year, compared to 2.9 per cent in the previous survey led by potential decline in housing costs and COE premiums.