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Nikkei Markets

Singapore growth outlook unchanged despite uncertainties

Central bank survey also shows growing inflation pressures

MAS's latest survey shows economists expect Singapore’s manufacturing sector to grow by 7.6% this year, slowing from 2017’s increase of 10.1%.    © Reuters

SINGAPORE (Nikkei Markets) -- Private sector economists kept their growth forecast for Singapore intact despite increased concerns stemming from protectionism in the U.S., a quarterly central bank survey showed on Wednesday.

According to the latest Monetary Authority of Singapore's Survey of Professional Forecasters, the city-state's economy is expected to expand by 3.2% this year, slowing from the 3.6% increase achieved in 2017.

The growth forecast was, however, unchanged from the previous survey's median estimate of 3.2% and at the higher end of the government's official forecast of 2.5% to 3.5% for 2018.

For 2019, economists expect growth to slow further to 2.7%, MAS said.

"Trade protectionism continues to weigh on the minds of 89% of respondents, with further escalation of trade rhetoric by the U.S. and its trading partners, as well as implementation of announced tariffs causing concern," MAS said in its report.

"In addition, a growing number of respondents cited slower growth in China as a downside risk on the back of tightening credit conditions," the Singapore central bank added.

U.S. President Donald Trump intends to impose tariffs on a further $200 billion in Chinese imports as soon as a public comment period on the plan ends on Sept 6. Trump has also threatened to exclude Canada from a new trade deal that will replace the North American Free Trade Agreement.

MAS said its latest survey showed economists expect Singapore's manufacturing sector to grow by 7.6% this year, slowing from 2017's increase of 10.1%. In contrast, the finance and insurance sector is expected to grow at a faster pace of 6.7% compared with last year's 4.8%.

Manufacturing accounts for around one-fifth of Singapore's economy, while financial services contribute about 13%.

On inflation, MAS's latest survey showed economists expect the consumer price index will increase by 0.7% this year, quickening slightly from last year's 0.6%. The headline inflation rate is expected to rise further to 1.5% in 2019.

Core inflation, meanwhile, is expected to come in at 1.7% this year, up from 1.5% in 2017.

Singapore's core inflation measure, which excludes accommodation and private road transport as these are strongly influenced by government policies, will projected to rise further to 1.9% in 2019.

MAS said 23 economists and analysts participated in its latest survey out of the 27 polled.

--Kevin Lim

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