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Wed, Dec 09, 2020 – 12:13 pm
SINGAPORE’s economy appears to be on track to contract 6 percent in 2020, although unemployment could rise further by the end of the year, according to private sector economists surveyed by the Monetary Authority of Singapore (MAS) in a quarterly survey.
This latest forecast for full-year gross domestic product (GDP) is unchanged from the September Professional Forecasters Survey.
However, respondents now believe that the manufacturing sector could more significantly boost Singapore’s economy with growth of 5.8 percent, compared with 2.3 percent in the previous survey. Meanwhile, construction could suffer deeper setbacks with a contraction of 36.2%, below the September expectation of a drop of 23%.
Predictions improved for wholesale and retail, which is expected to decline 5% instead of 6.4%, and for accommodation and private consumption, which is expected to decline 27% instead of 29 ,1%.
On the other hand, finance and insurance are expected to grow 4.6% instead of 4.9%, while national non-oil exports could increase 4.2% instead of 4.5%. Private consumption is expected to contract by 13.4% instead of 11.8%.
Sent on November 23, the survey reflects the opinions of 23 economists and analysts and does not represent the opinions or forecasts of MAS.
For the fourth quarter, they expect the economy to contract 4.5 percent year-on-year. But GDP is expected to recover in 2021 with growth of 5.5%.
Headline and core inflation are forecast to be -0.3% and -0.2%, respectively, which are within the official forecast of -0.5% to zero%. In 2021, however, both are forecast to hit 0.6 percent.
Respondents expect the unemployment rate to reach 3.7 percent in December, down from 3.5 percent in the previous survey.
An escalation of the Covid-19 pandemic remains the main downside risk to Singapore’s growth, with 88.9 percent of respondents citing this.
Respondents were also concerned about risks due to an earlier-than-expected pullback in support for global macroeconomic policy, resulting in a premature tightening of global financial conditions and weaker demand due to fiscal consolidations. This was identified by 44.4 percent of those surveyed, up from 20 percent in September.
However, the number of respondents who view an escalation in tensions between the United States and China as a downside risk has dropped sharply to 27.8 percent, down from 60 percent in the previous survey, before the United States presidential election.
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