Economists expect Singapore economy to shrink 6.5% this year
By Asha Popatlal, Channel NewsAsia | Posted: 10 June 2009 1306 hrs
Singapore's skyline
Economists expect Singapore economy to shrink 6.5% this year
SINGAPORE - Economists polled by the Monetary Authority of Singapore (MAS) now expect the domestic economy to shrink 6.5 per cent this year.
This is worse than the 4.9 per cent contraction predicted in the previous survey in March. But the headline number is still at the more optimistic end of the government's forecast of a 6 to 9 per cent contraction.
The 19 economists and analysts who took part in the latest quarterly survey also expect a jobless rate of 4.2 per cent by the end of the year, according to the survey released on Wednesday. This is slightly better than the 4.4 per cent unemployment rate forecast in March.
Job cycles usually lag 2 to 3 quarters behind the economic cycle but economists are optimistic that the job situation will improve by year end.
Economists said the worst may well be over for the Singapore economy, after the economy shrank 10.1 per cent on year in the first quarter.
And the low base effect may well see the numbers improving from here on.
"By the end of this year, we could see year-on-year gains in GDP. I think there is a chance that when we get the final 2009 data, it will be better than minus 6," said Robert Prior-Wandesforde, senior Asian economist at HSBC.
The survey said the construction industry is set to grow about 16 per cent this year, compared with last year.
But the median forecast is for manufacturing to decline 14 per cent on year and for financial services to shrink 4.1 per cent.
"Some of the key data we should keep an eye on is exports and industrial production numbers. These two numbers will have very strong implications on the manufacturing sector," commented Irvin Seah, economist at DBS Bank.
"I think the big turnaround from here will be in the industrial sector, the manufacturing sectors of the economy which will be lifted by an improvement in trade. We have seen the bottom of the industrial cycle and that in turn means we have seen the bottom of the economic cycle. So industry will begin to recover and then finally, services after that," said Prior-Wandesforde.
The survey of 19 economists also reinforced recent views that the economic recovery is expected to gain traction from the second half of this year.
According to preliminary predictions, GDP will grow 4.2 per cent in 2010, higher than the 3.3 per cent prognosis made in the March survey.
DBS thinks the better numbers could result in consumer inflation rising to 1.5 per cent next year.
The survey also expects the consumer price index for 2009 to fall 0.5 per cent, compared with expectations for a 0.2 per cent rise reported in the March survey.
On the Singapore dollar, the economists expect the US dollar to fetch S$1.466 at the end of the year, compared with S$1.560 forecast in the previous survey. - CNA/ir/ls
By Asha Popatlal, Channel NewsAsia | Posted: 10 June 2009 1306 hrs
Singapore's skyline
Economists expect Singapore economy to shrink 6.5% this year
SINGAPORE - Economists polled by the Monetary Authority of Singapore (MAS) now expect the domestic economy to shrink 6.5 per cent this year.
This is worse than the 4.9 per cent contraction predicted in the previous survey in March. But the headline number is still at the more optimistic end of the government's forecast of a 6 to 9 per cent contraction.
The 19 economists and analysts who took part in the latest quarterly survey also expect a jobless rate of 4.2 per cent by the end of the year, according to the survey released on Wednesday. This is slightly better than the 4.4 per cent unemployment rate forecast in March.
Job cycles usually lag 2 to 3 quarters behind the economic cycle but economists are optimistic that the job situation will improve by year end.
Economists said the worst may well be over for the Singapore economy, after the economy shrank 10.1 per cent on year in the first quarter.
And the low base effect may well see the numbers improving from here on.
"By the end of this year, we could see year-on-year gains in GDP. I think there is a chance that when we get the final 2009 data, it will be better than minus 6," said Robert Prior-Wandesforde, senior Asian economist at HSBC.
The survey said the construction industry is set to grow about 16 per cent this year, compared with last year.
But the median forecast is for manufacturing to decline 14 per cent on year and for financial services to shrink 4.1 per cent.
"Some of the key data we should keep an eye on is exports and industrial production numbers. These two numbers will have very strong implications on the manufacturing sector," commented Irvin Seah, economist at DBS Bank.
"I think the big turnaround from here will be in the industrial sector, the manufacturing sectors of the economy which will be lifted by an improvement in trade. We have seen the bottom of the industrial cycle and that in turn means we have seen the bottom of the economic cycle. So industry will begin to recover and then finally, services after that," said Prior-Wandesforde.
The survey of 19 economists also reinforced recent views that the economic recovery is expected to gain traction from the second half of this year.
According to preliminary predictions, GDP will grow 4.2 per cent in 2010, higher than the 3.3 per cent prognosis made in the March survey.
DBS thinks the better numbers could result in consumer inflation rising to 1.5 per cent next year.
The survey also expects the consumer price index for 2009 to fall 0.5 per cent, compared with expectations for a 0.2 per cent rise reported in the March survey.
On the Singapore dollar, the economists expect the US dollar to fetch S$1.466 at the end of the year, compared with S$1.560 forecast in the previous survey. - CNA/ir/ls
