Survey: Economists expect headline inflation in Singapore to hit 5pc in 2022, leading to slower economic growth
SINGAPORE, June 8 — Private economists expect headline inflation in Singapore to hit 5 per cent this year, up from their March estimate of 3.6 per cent, leading them to slightly downgrade their forecast for full-year economic growth.
A survey of the economists by the Monetary Authority of Singapore (MAS), published today, showed that, on average, they now expect the economy to expand by 3.8 per cent in 2022, down from their March estimate of 4 per cent.
The quarterly survey of professional forecasters also found that the average forecast for core inflation, which excludes private transport and accommodation costs, rose from 2.7 per cent previously to 3.4 per cent for 2022.
The survey collated responses from 24 economists and analysts who closely monitor the Singapore economy.
Inflation, the measure of how fast the prices of goods and services rise, is making headlines around the globe as the biggest economic challenge of 2022. In the world’s largest economy, the United States, for example, inflation is at 40-year highs.
Since the start of the year, a host of pressures — such as the surge in economic activity as economies emerge from the pandemic, the war in Ukraine, and supply chain problems — have led to higher consumer prices across the board.
The latest survey findings are in line with the official 2022 forecast by MAS, which has flagged the risk of higher than previously anticipated inflation in the months ahead.
Even though the economists expect higher inflation in 2022, they believe it will ease next year. Headline inflation is expected to come in at 3 per cent in 2023, while core inflation is forecast to be 2.8 per cent.
The economists polled expect the economy to grow by 4.8 per cent in the current second quarter, up from 3.7 per cent growth recorded in the first quarter, with the sharper-than-expected rise in inflation, driven mainly by higher energy and food prices, still cited as the top downside risk.
These factors were named by 88.2 per cent of respondents as compared with 77.8 per cent in the previous survey.
The economists were also concerned about the risks resulting from slower economic activity in China, where extended Covid-19 lockdowns have disrupted economic activity, as well as weaker-than-expected global growth.
Still, 60 per cent of the economists see firmer growth in China as the economy reopens as offering upside potential for Singapore’s economy, up from only 29.4 per cent who felt that way in March.
They are also hopeful that an accelerated revival in travel and tourism-driven by ongoing border reopening, as well as a stronger-than-expected expansion in manufacturing output, will benefit Singapore’s economy.
The economists polled also expected:
• Corporate profits to increase year-on-year (55.6 per cent)
• Private residential property prices to increase (70 per cent)
• Corporate bond spreads to remain stable (44.4 per cent) while one-third expect them to widen, and the remainder anticipate that they will narrow
When it comes to the financial market and lending conditions here, respondents cited tighter global financial conditions, spillovers from weakening economic activity and financial markets in China, an escalation in geopolitical tensions, and a stronger currency as the top factors that could potentially affect them.
They also identified the slower-than-expected pace of monetary policy tightening among major central banks as an upside driver of the domestic financial market and lending conditions, among others. — TODAY
SINGAPORE, June 8 — Private economists expect headline inflation in Singapore to hit 5 per cent this year, up from their March estimate of 3.6 per cent, leading them to slightly downgrade their forecast for full-year economic growth.
A survey of the economists by the Monetary Authority of Singapore (MAS), published today, showed that, on average, they now expect the economy to expand by 3.8 per cent in 2022, down from their March estimate of 4 per cent.
The quarterly survey of professional forecasters also found that the average forecast for core inflation, which excludes private transport and accommodation costs, rose from 2.7 per cent previously to 3.4 per cent for 2022.
The survey collated responses from 24 economists and analysts who closely monitor the Singapore economy.
Inflation, the measure of how fast the prices of goods and services rise, is making headlines around the globe as the biggest economic challenge of 2022. In the world’s largest economy, the United States, for example, inflation is at 40-year highs.
Since the start of the year, a host of pressures — such as the surge in economic activity as economies emerge from the pandemic, the war in Ukraine, and supply chain problems — have led to higher consumer prices across the board.
The latest survey findings are in line with the official 2022 forecast by MAS, which has flagged the risk of higher than previously anticipated inflation in the months ahead.
Even though the economists expect higher inflation in 2022, they believe it will ease next year. Headline inflation is expected to come in at 3 per cent in 2023, while core inflation is forecast to be 2.8 per cent.
The economists polled expect the economy to grow by 4.8 per cent in the current second quarter, up from 3.7 per cent growth recorded in the first quarter, with the sharper-than-expected rise in inflation, driven mainly by higher energy and food prices, still cited as the top downside risk.
These factors were named by 88.2 per cent of respondents as compared with 77.8 per cent in the previous survey.
The economists were also concerned about the risks resulting from slower economic activity in China, where extended Covid-19 lockdowns have disrupted economic activity, as well as weaker-than-expected global growth.
Still, 60 per cent of the economists see firmer growth in China as the economy reopens as offering upside potential for Singapore’s economy, up from only 29.4 per cent who felt that way in March.
They are also hopeful that an accelerated revival in travel and tourism-driven by ongoing border reopening, as well as a stronger-than-expected expansion in manufacturing output, will benefit Singapore’s economy.
The economists polled also expected:
• Corporate profits to increase year-on-year (55.6 per cent)
• Private residential property prices to increase (70 per cent)
• Corporate bond spreads to remain stable (44.4 per cent) while one-third expect them to widen, and the remainder anticipate that they will narrow
When it comes to the financial market and lending conditions here, respondents cited tighter global financial conditions, spillovers from weakening economic activity and financial markets in China, an escalation in geopolitical tensions, and a stronger currency as the top factors that could potentially affect them.
They also identified the slower-than-expected pace of monetary policy tightening among major central banks as an upside driver of the domestic financial market and lending conditions, among others. — TODAY
