Business Times – 11 Mar 2008
Q2 may see another dip before rebound kicks in; inflation likely to rise
(SINGAPORE) Private sector economists have pared their forecasts of Singapore’s first quarter GDP growth to a median 5.7 per cent, from 7 per cent three months earlier.
Economic growth is then expected to dip below 5 per cent in Q2 and Q3 before rebounding in the final quarter for a year-round median of 5.6 per cent, according to forecasters polled by the Monetary Authority of Singapore.
The 19 economists who took part in the survey last month – soon after the 2007 economic results were released – trimmed their forecasts following slower than expected Q4 and 2007 figures.
The economy grew 5.4 per cent in Q4 – well below median forecasts of 7.7 per cent in the December 2007 poll. Year-round GDP growth was 7.7 per cent – also below market forecasts of about 8 per cent.
According to the latest poll findings, Singapore’s 2008 economic growth will ‘most likely’ come in between 5 and 5.9 per cent – a full point below the range most expected in the previous poll.
But apparently, not everyone is too bearish. Forecasts for Q1 growth actually hit 8.8 per cent at the top end and average 5.8 per cent, only one point above the lowest estimate.
The second quarter is expected to see the year’s lowest growth of around 4.4 per cent, before a pickup to 4.8 per cent in Q3 and 6.8 per cent in Q4, according to the median estimates.
Meanwhile, the 2008 consumer inflation rate is projected to rise to 5 per cent on average. Some economists see it hitting 7 per cent in Q1, with the median forecast a bit lower at 6.3 per cent.
As for the exchange rate, the forecasts see the Singapore dollar strengthening to 1.32 per US dollar by year-end, though the estimates centre around 1.38, close to the current rate.
Goldman Sachs’ view on the Singapore economy is probably fairly typical of the market’s at this point.
The investment bank’s regional economists recently cut their forecasts of Singapore’s 2008 GDP growth to 5.5 per cent, from 6.4 per cent, ‘on the back of increased external risks’, chiefly a global slowdown led by a US recession.
But they expect the domestic growth engine to keep ‘chugging along’, supported by easier monetary conditions and an expansionary fiscal stance.