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Economists Lower Singapore Growth, Inflation Outlook
Perspective | 13 June 2013
By Reuters

Singapore’s inflation for 2013 is expected to come in below the central bank’s forecast of 3 to 4 percent, a central bank survey released on 12 June showed, in a sign that rising prices have become less of a concern after two years of elevated cost pressures.

The Monetary Authority of Singapore’s (MAS) latest quarterly Survey of Professional Forecasters found that economists now expect the city-state’s consumer price index (CPI) to rise by 2.8 percent this year, a full percentage point below the median estimate of a 3.8 percent gain in the previous poll.

The MAS’s core inflation measure, which excludes housing and private car prices that are more influenced by government policy, will likely come in at 1.8 percent this year, down from the previous median estimate of 2.0 percent, the survey showed.

Inflation is, however, expected to pick up again in 2014 to 3.1 percent, according to the median estimate of economists who contributed to the survey.

Singapore, a key Asian financial centre, has been grappling with slow growth and relatively high inflation in recent years. But the inflation outlook has improved with the CPI rising by just 1.5 percent in April from a year earlier – the lowest gain in more than three years – as falling car prices and government rebates kept a lid on prices.

Singapore’s inflation was 4.6 percent last year and 5.2 percent in 2011.

The MAS conducts its survey every quarter after the release of detailed economic data for the preceding three-month period. The median forecasts in the latest report were based on the estimates of 22 economists.

Although Singapore’s first quarter gross domestic product (GDP) came in much better than expected (partly due to a surge in financial services as trading in stocks and foreign exchange soared), economists have become less optimistic about growth for the full year.

The MAS survey shows economists now expect GDP growth of 2.3 percent for 2013, slower than the median estimate of 2.8 percent in March.

And reflecting the dollar’s rise against most Asian currencies in recent months, forecasters now expect the Singapore dollar to end the year at 1.25 to the US currency, from 1.20 in the previous survey.

The Singapore dollar has lost around 2.6 percent against the dollar so far this year, and is currently trading around 1.25 to its US counterpart.

Singapore’s official forecast is for growth of 1 to 3 percent this year, suggesting a slightly better performance than last year’s 1.3 percent.

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