SINGAPORE: Analysts have slashed their growth forecast for Singapore’s economy for 2016 to 1.4 per cent from 1.8 per cent - the third time this year they have cut their forecast, according to a quarterly survey released by the Monetary Authority of Singapore (MAS) on Wednesday (Dec 14).
While in line with the Government's forecast of 1 per cent to 1.5 per cent growth, it would be Singapore's weakest annual growth since 2009.
The economy expanded by 1.1 per cent in the third quarter, lower than the median forecast of 1.7 per cent by analysts in the September survey. For the fourth quarter of 2016, the economists said they expect the economy to expand by 0.8 per cent.
The analysts also cut their growth forecast for 2017, lowering it to 1.5 per cent from an earlier prediction of 1.8 per cent.
The manufacturing sector is now expected to expand by 0.8 per cent this year, up slightly from 0.7 per cent in the previous survey. The accommodation and food services industry is expected to grow 1.9 per cent, up from 1.4 per cent.
Analysts were less upbeat about other major sectors. The wholesale and retail trade industry is now expected to expand 0.1 per cent this year, down from 2.1 per cent. The growth forecast for the finance and insurance industry was also cut to 0.5 per cent from 2 per cent, while the forecast for the construction sector was cut to a 2.3 per cent growth from 3 per cent.
INFLATION FORECAST UNCHANGED
Inflation for the year is expected to come in at -0.5 per cent, unchanged from the analysts’ forecast in the previous survey. For the fourth quarter of 2016, inflation is expected to be zero per cent.
Core inflation - which excludes accommodation and car prices - is expected to be 0.9 per cent, slightly down from 1 per cent predicted in the previous survey.
Headline inflation for next year is likely to be 1 per cent, unchanged from the previous survey, while MAS core inflation is expected to be 1.3 per cent, down slightly from the earlier forecast of 1.4 per cent.
Looking ahead, economists said they expect the unemployment rate to be 2.1 per cent at year-end, down from the 2.2 per cent in September's prediction.
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 22 economists and analysts, MAS said.