Economists have cut their economic forecasts and raised their inflation outlook for Singapore, a central bank survey released on Wednesday showed, in a further sign that the country is likely to face another year of sub-par growth and elevated inflation in 2013.
Singapore, whose trade is three times gross domestic product (GDP), has been hurt by the downturn in Western economies that has crimped demand for its exports.
The wealthy city-state of 5.3 million people has also
underperformed neighbours such as Malaysia and Indonesia, which can rely on their much larger populations to prop up growth.
"The key thing is Singapore's small domestic market.
Regional economies, especially in the rural household sector, have benefitted from still strong resource prices so there is the domestic consumption story," said CIMB regional economist Song Seng Wun.
Economists now expect the Southeast Asian city-state's GDP to grow 1.5 percent this year, down almost a full percentage point from the median estimate of 2.4 percent in the previous poll, according to the Monetary Authority of Singapore's (MAS) latest quarterly Survey of Professional Forecasters.
In contrast, Indonesia's central bank said Tuesday it
expects full-year growth of 6.3 percent in 2012, while most
economists expect Malaysia's economy will expand by more than 5 percent this year.
However, Singapore may avoid a technical recession based on the median estimate of 1.8 percent year-on-year growth in the fourth quarter, which works out to an annualised quarter-on-quarter and seasonally adjusted expansion of around 3 percent.
The city-state's economy contracted an annualised and
seasonally adjusted 5.9 percent in the third quarter from the second quarter.
MAS conducts its survey every quarter after the release of
economic data for the preceding three-month period. The median forecasts in the latest report were based on the estimates of 21 economists.
For 2013, the Singapore economy is now seen growing by just 2.7 percent, down from 3.9 percent in the previous survey but in line with the government's latest forecast for an expansion of 1-3 percent next year.
Singapore's inflation for 2012 will likely come in at 4.7
percent this year before slowing to 3.8 percent next year, the latest survey showed, with the latest estimates coming well above the September survey's median forecasts.
While rising rents and soaring car prices have been the main contributors to inflation in Singapore over the past two years, government measures to make it harder for firms to employ low-cost foreign workers have also contributed by pushing up the prices