Economists Take Paring Knife To '08 Growth Forecast

Source : The Business Times, December 8, 2007

18 forecasters polled by MAS see growth slowing sharply in H1 2008

Economists have pared their forecasts for Singapore's 2008 GDP growth to a median 6.3 per cent, from 6.5 per cent three months earlier.

Eighteen market economists who responded to the Monetary Authority of Singapore's quarterly survey of professional forecasters last month estimated that the economy will grow 7.7 per cent in the current final quarter, down from Q3's 8.9 per cent pace.

This will bring full-year growth to 8 per cent, at the top end of the official projected range. For the first nine months of 2007, GDP growth averaged 8.1 per cent.

The latest MAS poll findings also see GDP growth slowing sharply in the first half of 2008 to a median 7 per cent in Q1 and 6.1 per cent in Q2. Growth is then forecast to hold at around 6 per cent through the remaining quarters for a year-round pace of 6.3 per cent.

Most likely, the economy will grow between 6 and 6.9 per cent next year.

But there is also a 31 per cent chance of 2008 growth averaging between 5 and 5.9 per cent, while the probability of growth hitting 7 per cent or higher is seen to be just over 21 per cent.

Last month, the Ministry of Trade and Industry raised its early forecast of Singapore's 2008 growth by half a percentage point to 4.5-6.5 per cent.

Going by past survey results, the economy has tended to outperform the market forecasts.

In the latest poll, conducted about three weeks ago, economists expect broad-based GDP growth across the manufacturing and services sectors to continue in 2008.

The construction sector, notably, is forecast to grow 13.5 per cent, leading growth among the key sectors.

Consumer inflation is expected to surge from an estimated 2 per cent in 2007 to 3.7 per cent next year, while unemployment is forecast to remain at around 2 per cent.