Economists’ Median Growth Forecast Rises To 7.5%

Source : The Straits Times, 06 Sept 2007

Rosier estimate by 18 analysts is at mid-point of govt’s range of 7% to 8%

FORGET recent stock market woes and weak export numbers.

Projections by private-sector economists for Singapore’s full- year economic growth have turned even rosier over the past three months.

A quarterly survey of economists by the Monetary Authority of Singapore (MAS) threw up a median forecast of 7.5 per cent full-year growth, up from the 6 per cent in June’s survey.

This puts the latest consensus view right in the middle of the Government’s official 7 to 8 per cent forecast range.

This month’s findings were drawn from forecasts by 18 economists and analysts.

According to the survey results out yesterday, half of those polled predict that economic expansion this year will come in between 7 per cent and 7.9 per cent.

Over a quarter of them are even more bullish, gunning for at least 8 per cent growth.

For the current quarter, the median forecast is for growth of 7.8 per cent year-on-year.

The upbeat predictions come after second-quarter economic growth strongly beat market forecasts.

Despite disappointing export numbers, economic growth in the April-to-June period came in at 8.6 per cent, when the consensus forecast was 6.1 per cent.

The overall performance was lifted by two star sectors - construction and financial services.

Compared to the previous poll, economists now expect the two sectors to chart significantly stronger growth for the year.

The financial services sector is tipped to expand by a median 13.5 per cent this year, up from 10.2 per cent in the last survey.

Meanwhile, according to market consensus, construction would probably grow by 15 per cent this year, instead of the 10 per cent projected previously.

Predictions for manufacturing, wholesale and retail trade, as well as private consumption, also turned more bullish, compared to three months ago.

However, consensus forecasts for non-oil domestic exports and the hotels and restaurants business deteriorated.

Economists’ median expectations for consumer price index (CPI) inflation were raised.
They also forecast a lower jobless rate.

‘The CPI inflation forecast for 2007 rose to a median of 1.5 per cent, from the 1.2 per cent reported in the previous survey, while the outlook for the year-end unemployment rate edged down from 2.6 per cent to 2.5 per cent,’ said the MAS survey report.

Looking beyond this year, economists’ median prediction for 2008 economic growth came in at 6.5 per cent, an improvement over 5.8 per cent in the previous poll.