PRIVATE-SECTOR economists’ median forecast for full-year 2024 growth rose to 2.6 per cent, from 2.4 per cent previously, in the latest quarterly survey of professional forecasters published by the Monetary Authority of Singapore (MAS) on Wednesday (Sep 11).
But the median forecast for 2025 growth was unchanged at 2.5 per cent.
For 2024, expectations for manufacturing’s growth continued to fall, but this was more than made up for by higher forecasts for most other sectors, compared to the previous survey.
For full-year inflation, the median forecast for headline inflation fell to 2.6 per cent, down from 2.8 per cent in last quarter’s survey; for core inflation, it slipped to 2.9 per cent, from 3 per cent.
As for 2025, economists expect both headline and core inflation to ease further, with the greatest probability being that they will come in between 2 and 2.4 per cent.
The latest expectations for 2024 remain aligned with official forecasts. The government expects full-year gross domestic product (GDP) growth of between 2 and 3 per cent. At its July meeting, MAS lowered its full-year forecast for headline inflation to a range of 2 to 3 per cent, but maintained its core inflation forecast range at 2.5 to 3.5 per cent.
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The latest survey was sent to 25 professional forecasters on Aug 13, and received 21 responses. The survey reflects their views and not those of MAS.
Sectoral differences
Compared to June’s survey, economists’ growth predictions have risen for three of five major sectors: finance and insurance; construction; as well as wholesale and retail trade.
Finance is expected to have the highest growth of 5.7 per cent, up from 5.1 per cent in the last survey.
In contrast, economists took a dimmer view of manufacturing, as well as accommodation and food services. The median forecast for the latter declined slightly to 2.9 per cent, from 3.1 per cent in the previous survey.
Manufacturing is expected to record the lowest growth among the sectors, at 0.6 per cent. This is down from 1.6 per cent in the last survey in June, and 4 per cent in the March survey.
In line with poorer expectations for manufacturing, the growth forecast for non-oil domestic exports worsened to 3 per cent, from 4 per cent in June.
Still, the expected overall unemployment rate for the year stayed at 2.1 per cent.
In Q3 2024, GDP is expected to rise 2.6 per cent year on year, slightly below the 2.9 per cent rate charted in Q2. Headline inflation in Q3 is predicted to be 2.4 per cent on year, and core inflation is forecast at 2.9 per cent.
No policy change for now
Given the latest growth and inflation outlooks, most respondents expect monetary policy to remain unchanged in October’s upcoming policy meeting – the final in MAS’ schedule of quarterly meetings for the year. But more expect changes to come next year.
In the latest survey, 10.5 per cent of respondents expect policy to be loosened in October via a reduction in the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, up from 6.3 per cent in the June survey. Half of respondents anticipate this move in January next year, while 35.3 per cent predict it in April 2025.
No respondents expect a change in the level at which the S$NEER policy band is centred in October, compared with the 6.3 per cent who expected the level to be lowered in the previous survey. Only one respondent believes such a move will take place in January, and none expect it to happen in April.
Similar to the last survey, no respondents expect an adjustment to the width of the S$NEER this October – but one respondent now anticipates the width of the band to be widened in January, up from none in the June survey.
After five successive tightening moves in 2021 and 2022, MAS has kept policy unchanged in its three meetings in 2023 and its 2024 meetings so far.
Eyes on external growth
As for risks to economists’ current forecasts, external growth conditions became the most-cited consideration, both on the downside and on the upside.
An external growth slowdown was mentioned as a downside risk by 73.3 per cent of respondents. This was up from 50 per cent in June’s survey, where it tied with China’s weaker growth as the most-cited downside risk.
An external growth slowdown was also the most-cited top risk to the economy in September, with 40 per cent of respondents in the latest survey flagging it as such.
China’s weaker growth is now tied with spillovers from geopolitical tensions – the most-cited risk in June – as the second-most frequently cited downside risk, by 66.7 per cent of respondents.
The risk of tighter financial conditions was also flagged by 26.7 per cent of economists surveyed.
For upside risks, better-than-expected external growth was cited the most, by 73.3 per cent, up from 64.3 per cent in June. Some 40 per cent of respondents also thought this was the top upside risk.
The other key upside risks were more robust growth in China, raised by 66.7 per cent, and the faster-than-expected tech cycle recovery, raised by 60 per cent.
