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SINGAPORE: Private sector economists have become more bullish about Singapore's economy, upgrading their growth forecast for the year to 14.9 per cent.
That's the finding of the latest survey by the Monetary Authority of Singapore (MAS).
But with growth expected to see a slowdown in the second half, some analysts are not ruling out a technical recession in the third and fourth quarters.
Economists had forecast in the previous MAS survey carried out in June that the Singapore economy would grow 9 per cent this year.
In the latest survey, they expected the key manufacturing sector to grow by 28.7 per cent this year.
That will help the economy expand by 14.9 per cent for the entire year, which is at the top end of the government's growth forecast of 13-15 per cent.
But growth in the second half will be less robust than in the first six months.
And economists said Singapore might dip into technical recession. However, it does not mean that the economy is in severe crisis.
A technical recession is defined as two straight quarters of quarter-on-quarter contractions in the GDP.
Economists now expect third-quarter GDP to grow by 11.6 per cent on year, down from 18.8 per cent in the previous three months.
That's due to anticipated pullbacks in demand for manufactured products and more volatility in the pharmaceutical industry.
The recent anti-speculative measures implemented by the government to cool the property market will also affect the financial services sector, for instance, in mortgage financing and renovation loans.
DBS Bank economist Irvin Seah said: "It will certainly have a huge impact on sentiment. Buyers will actually hold back their purchases, and sellers may be worried about the gains they can get when they try to flip their property. So overall, banks will certainly be affected. Developers and real estate agencies, too."
But the property-cooling measures will help to ease inflationary pressures.
Economists projected that full-year Consumer Price Index (CPI) will come in at 2.9 per cent and ease to 2.5 per cent in 2011.
For next year, economists expected Singapore's economy to grow by 5 per cent.
They said the government's plan to spend $60 billion on the rail network over the next decade will benefit some sectors.
Standard Chartered Bank economist Alvin Liew said: "Even though construction number looks slightly weaker in the current survey compared to a few months ago, (with) the $60 billion now on hand, if there is any kind of slowdown, some of these construction works can help to offset some of the slowdown in other sectors."
Economists said other downside risks ahead include the lingering credit concerns in the Eurozone, a sharper-than-expected slowdown in China and a sub-par growth in the US next year.
The MAS Survey of Professional Forecasters saw 20 respondents. MAS said the survey does not represent its views or forecasts.
- CNA/ir
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