SG Economy

Economy: MAS cuts Singapore's 2015 GDP growth forecast to 2-2.5% from 2-4%
In its semi-annual macroeconomic review, MAS has shaved off the top range of its economic growth forecast for Singapore in 2015/16 to 2-2.5% from its earlier 2-4% estimate.

This comes as a confluence of regional headwinds and limited exposure to a US economic recovery casts a shadow on Singapore’s external-oriented sectors, in particular Singapore’s electronics sector (-5% q/q in 3Q15).

An advanced reading of 3Q15 GDP recovering 0.2% q/q after a 2.5% contraction in 2Q15. Back in Sep, economists polled by the MAS cut their average forecast for GDP to grow 2.2% from 2.7%.

Despite this, the central bank is sanguine on certain oil-related industries (midstream and downstream). Specifically, oil export and cargo volumes saw healthy expansions of 6.7% and 13.3% respectively in 3Q15. In contrast, the upstream offshore & marine industry continued to languish in 3Q15.

Meanwhile, the domestic-oriented industries should also see stable growth with the hospitality sector being a bright spot in the economy after visitor arrivals picked up in 2Q15, climbing 7.5% m/m in Jul.

These should help to support GDP growth in the coming quarters.

With Singapore’s current restructuring efforts, the MAS opines that growth will be driven by productivity gains underpinned by knowledge and skill upgrades. It thus sees the technology innovation-intensive sectors as important players in Singapore’s economy.