SINGAPORE: Singapore's economic growth this year is expected to come in at 3.3 per cent, according to private-sector economists polled in a quarterly survey by the Monetary Authority of Singapore (MAS) released on Wednesday (Dec 13).
This forecast is higher than the 2.5 per cent median forecast in the previous survey.
In November, the Government forecast full-year growth for the Singapore economy of 3 to 3.5 per cent, an upward revision from an earlier range of 2 to 3 per cent.
The Singapore economy expanded by 5.2 per cent in the third quarter of the year compared with the same period last year, marking the strongest quarterly expansion since 2013.
Manufacturing is expected to grow even more than previously predicted, with economists surveyed forecasting growth of 10.6 per cent, up from their 6.6 per cent growth prediction in September's survey.
Mr Irvin Seah, economist at DBS, said the improved global economic conditions, as well as a recovery in the US and Chinese economy have boosted external demand and helped lift the manufacturing sector. He added that the growth is sustainable going into 2018, but expects some degree of moderation.
“That is a reasonable assumption because after a very strong run-up, typically the sector will move into a more steady normalised growth path. That being said, it doesn't mean the external demand will weaken, it doesn't mean the manufacturing sector growth will dip into contraction.”
The finance and insurance industry is expected to post growth of 3.7 per cent, an increase from the 2.9 per cent growth predicted previously.
In contrast, the growth forecast for the construction sector was cut even more, with economists predicting the sector will contract by 7.6 per cent, a further contraction from the 4.2 per cent decline predicted in the last survey.
Mr Rajiv Biswas, chief economist for Asia-Pacific at HIS Markit, noted that the construction sector is forecast to grow only about 1 per cent next year.
“Very, very weak momentum. Macroprudential measures of the Singapore government over a number of years have helped prevent risk related to previously rapidly rising house prices ... Now these measures have been very effective, it has helped to stabilise the construction sector but it also means that its growth has been moderated and constrained."
Mr Song Seng Wun, economist at CIMB, said however that the sector could see some upside by the second half of next year.
"We may see more projects being revived or brought forward selectively. The next kicker for construction from the private sector will be from all those en-blocs that have been announced or finished.
"We could be seeing in 2018, another year of very mild contraction, but by the end of 2018 we should see some pickup – basically a better second half in 2018 and into 2019."
The accommodation and food services sector is forecast to contract by 1.5 per cent, unchanged from September's prediction, while the wholesale and retail trade sector is expected to do better than previously forecast with growth of 1.7 per cent, an increase from the 1.3 per cent predicted in the last survey.
Economists also raised their forecast for non-oil domestic exports, predicting growth of 9 per cent, up from the 7.4 per cent in the previous forecast.
INFLATION LIKELY TO COME IN AT 0.6%
Inflation for 2017 is predicted to come in at 0.6 per cent, a slight decrease from the 0.8 per cent predicted in the last survey. Core inflation - which excludes accommodation and car prices - is expected to come in at 1.5 per cent, down slightly from the 1.6 per cent forecast in September.
The unemployment rate is expected to be 2.2 per cent at the end of the year, unchanged from the previous survey.
For 2018, respondents expect GDP growth to hit 3 per cent, while inflation is projected to come in at 1 per cent and core inflation at 1.6 per cent.
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 respondents, MAS said.