Economists hold Singapore’s GDP forecast for 2020 at -6%, MAS survey shows

SINGAPORE: Private sector economists polled by the Monetary Authority of Singapore (MAS) expect the economy to contract by 6 per cent this year, unchanged from the previous survey published three months ago.

The economy will likely shrink by 4.5 per cent year-on-year in the final three months of the year, following a smaller-than-expected decline of 5.8 per cent in the third quarter, according to the central bank’s latest quarterly survey released on Wednesday (Dec 9). 

For the expected recovery in 2021, the economists are holding on to their earlier estimate of 5.5 per cent growth. This is within the Government’s forecast range of 4 to 6 per cent growth for next year.

READ: Singapore revises growth outlook again as Q3 GDP shrinks at slower 5.8% amid COVID-19

Sent out on Nov 23, the MAS survey received 23 responses from private sector watchers of the local economy. Survey findings do not reflect the central bank’s views or forecasts, it said. 

Across the key macroeconomic indicators, manufacturing had the biggest upgrade in terms of a full-year outlook. Economists now expect the sector to expand 5.8 per cent in 2020, up from 2.3 per cent in the last survey. 

Smaller contractions were also predicted for wholesale and retail trade, as well as accommodation and food services.

But forecasts for other indicators were gloomier, with construction downgraded sharply. The sector is now seen declining 36.2 per cent for the full year, compared to 23 per cent in the previous survey.

Other forecasts that worsened slightly include private consumption, which is expected to shrink 13.4 per cent compared with the previous median forecast of an 11.8 per cent decline.

READ: COVID-19 downturn to be more prolonged than past recessions, slow recovery for jobs market: MAS

Growth expectations were also trimmed slightly for finance and insurance, as well as non-oil domestic exports. 

There was a slight pick-up in terms of unemployment, with a median forecast of 3.7 per cent compared with 3.5 per cent previously.

A further deterioration in the current COVID-19 outbreak continued to top the respondents' list of downside risks to the economy, followed by concerns over insufficient stimulus globally and an escalation in US-China trade tensions. 

Conversely, an effective containment of the pandemic through the widespread global deployment of a vaccine was the top upside driver. Others include the reopening of borders to international travel, a stronger-than-expected performance in manufacturing and fiscal stimulus to support Singapore’s recovery.

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