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Singapore 2019 growth forecast falls to 2.6%: MAS poll

This article is more than 12 months old

Economists point to US-China trade spat as downside risk

Economists have lowered the outlook for Singapore's 2019 growth rate for the second time in three months, a quarterly poll released by the Monetary Authority of Singapore (MAS) yesterday showed.

They expect Singapore to have growth of 2.6 per cent next year, compared with an estimated 3.3 per cent this year.

The latest 2019 projection is lower than the 2.7 per cent seen in the September report and the 2.8 per cent that the poll released in June showed.

Singapore's Trade Ministry forecasts 2019's gross domestic product growth at between 1.5 per cent and 3.5 per cent.

Rising trade protectionism remains a key concern among the 23 economists and analysts polled. All of them pointed to increased US-China trade conflict as a downside risk to the Singapore economy.

At the same time, more felt there was a bigger chance for trade tensions to thaw, with 47 per cent of respondents seeing this as a potential upside compared with 37 per cent in the September poll.

Some also felt that Singapore could benefit from the diversion of trade and investment to the region as a result of the uncertainty over US-China trade relations.

The MAS survey, however, was launched on Nov 22 before the US and China agreed on Dec 1 to a 90-day ceasefire to de-escalate trade tensions.

China's economic slowdown and the tightening of global financial conditions - which would lead to higher interest rates - were also seen as downside risks.

But if US Fed rate hikes are slower than expected, Singapore's economy may benefit, some said.

Economists maintained their forecast of unemployment rate at 2.1 per cent for this year.

Looking at the next year, Bank of America Merrill Lynch economist Mohamed Faiz Nagutha sees a challenging year for Singapore, though a crisis is unlikely.

"As a small and open economy, Singapore will bear the brunt of any significant global slowdown.

"But strong domestic fundamentals and policy buffers should help better navigate the challenges.

"Overall, we hold a relatively optimistic outlook for Singapore, but risks are tilted to the downside," he said in a year-end outlook report. - REUTERS, THE STRAITS TIMES

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