SINGAPORE: Private-sector economists have once again trimmed their 2019 growth forecasts for Singapore, with trade protectionism and a slowdown in China among their key concerns.
The economy is tipped to grow by 2.5 per cent this year, the latest quarterly survey from the Monetary Authority of Singapore (MAS) showed on Wednesday (Mar 13). This is a slight downgrade from the 2.6 per cent in the previous poll and the 2.7 per cent seen in the September survey.
Economists have also penciled in a dimmer outlook for almost all key macroeconomic indicators.
The key manufacturing sector is expected to clock just 2 per cent growth in 2019 – a sharp downgrade from the 3 per cent in December’s survey. This as economists shaved off more than half of their expectations for growth in non-oil domestic exports to 1.1 per cent, from 2.9 per cent previously.
There was also more pessimism when it comes to the outlook for finance and insurance, wholesale and retail trade, accommodation and food services and private consumption.
Construction was the sole exception with brightened prospects in 2019. Apart from finally returning to expansionary growth, economic watchers have upped their forecast for this sector from 1.5 per cent to 2.1 per cent.
The latest quarterly survey also showed trade protectionism as a top downside risk among 84 per cent of the 23 respondents. While this remains a high proportion, it fell from the 100 per cent in the previous survey reflecting “recent developments in trade relations between China and the US”, MAS said.
At the same time, more economists felt there could be a higher possibility for trade tensions to ease, with 74 per cent of economists seeing this as a potential upside, compared with 47 per cent in December.
US and China remain in negotiations for a deal to ease their tit-for-tat tariffs dispute. The talks may be in the “final weeks” but US trade representative Robert Lighthizer cautioned on Tuesday that major issues remain.
A hard landing in China, possibly exacerbated by inadequate policy responses, was the second top downside risk according to 53 per cent of economists. This was an increase from 41 per cent in the previous poll.
For 2020, Singapore may see even slower full-year growth of 2.4 per cent, the MAS survey said.
OCBC Bank’s head of treasury research and strategy, Selena Ling, said the sense of "greater caution” from economists was not entirely unexpected given that world organisations, like the International Monetary Fund, have recently cut their growth forecasts.
The downward trend in Singapore’s purchasing managers’ index (PMI) also points to “decelerating momentum for the coming months”, she noted.
Ms Ling is among the 23 economists polled for the latest MAS survey.
For February, the overall manufacturing PMI fell for the sixth consecutive month to 50.4 in February, while the electronics sector PMI recorded a fourth month of contraction at 49.5.
Ms Ling, who is predicting Singapore to grow 2.3 per cent this year, expects downside risks to emerge as early as the first quarter.
Manufacturing, in particular, could contract 0.5 per cent year-on-year amid external headwinds.
“Even if a US-China trade deal does materialise soon, this may not unwind the manufacturing and export malaise that seems to be dominating Asian economies in January (and) February,” she said.