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Singapore economy to grow 3.8% this year: MAS Survey

GDP forecast unchanged from the previous survey in March; inflation likely to slow.

SINGAPORE: Singapore's economy is expected to grow by 3.8 per cent this year, according to a quarterly survey of economists released by the Monetary Authority of Singapore (MAS) on Wednesday (June 11).

The figure is unchanged from the previous survey done three months ago, despite gross domestic product (GDP) growth in the first quarter being lower than expected, MAS said. GDP grew 4.9 per cent in the first quarter, lower than the median forecast of 5.3 per cent reported in the March survey.

"In terms of the forecast, the numerical impact, frankly speaking, is very insignificant. I guess, more importantly, we need to focus on the growth outlook in the coming quarters. I think the survey result shows that market is expecting growth to slow down in the second quarter," said Senior Economist at DBS Bank, Irvin Seah.

Economists pegged GDP growth for the second quarter at 3.3 per cent, higher than the 3 per cent forecasted in the previous survey. However, they say a drag on growth may come from manufacturing, given the drop in April's industrial output. However, this sector may see support, if external demand from western economies improves.

Inflation is expected to slow, with the economists forecasting consumer price index (CPI) to come in at 2.2 per cent for the full year, down from the 2.8 per cent forecast in March. Core inflation – which excludes accommodation and car prices – is expected at 2.4 per cent, unchanged from the previous survey. This indicates economists expect car prices and rents to come down from last year.

"In terms of core inflation - that has remained relatively stable. Why is that? Because the inflation that we expect to come from both headline and core this year is actually the same. It's services inflation. And I think that, so far, is running in line with people's expectations," explained Mr Edward Lee, the Regional Head of Research for Southeast Asia at Standard Chartered Bank.

Looking further ahead, economists expect GDP will expand by 3.9 per cent in 2015.

The MAS Survey of Professional Forecasters is conducted every quarter after the release of detailed economic data for the preceding three months. The median forecasts in the latest report were based on the estimates of 23 economists, MAS said.

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