PRIVATE-SECTOR economists marginally raised their forecast for Singapore’s 2024 economic growth and lowered their expectations for headline inflation, in the latest quarterly survey of professional forecasters published by the Monetary Authority of Singapore (MAS) on Wednesday (Mar 13).

In the survey, the median forecast for growth in 2024 was 2.4 per cent, up marginally from the previous survey’s forecast of 2.3 per cent.

Respondents were significantly more upbeat on the manufacturing outlook, though expectations for growth in accommodation and food services worsened.

Headline inflation in 2024 is now expected at 3.1 per cent – down from 3.4 per cent in the prior quarter’s survey – while the forecast for core inflation stayed unchanged at 3 per cent.

The dip in the headline inflation forecast was likely due in part to the drop in Certificate of Entitlement premiums, noted OCBC chief economist Selena Ling. But the unchanged core inflation forecast is suggestive that domestic prices – including water, local services such as public transport and healthcare – remain resilient, she added.

DBS economist Chua Han Teng expects real gross domestic product (GDP) growth to recover to 2.2 per cent this year, from last year’s 1.1 per cent. This hinges on better external-oriented sector performance in manufacturing, wholesale trade, and financial services, while travel-related services also provide support, he said.

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Though more upbeat than the last survey, the latest expectations remained aligned with official forecasts for both GDP growth and inflation.

The government expects GDP growth to be between 1 and 3 per cent in 2024, and both headline and core inflation to be between 2.5 and 3.5 per cent.

The latest survey was sent to 26 professional forecasters on Feb 15, and received 23 responses. The survey reflects their views and not those of MAS.

Compared to last December’s survey, economists predicted higher growth for three of five GDP components.

In particular, manufacturing is predicted to grow 4 per cent, up from 2.3 per cent. Also up were forecasts for finance and insurance at 3.4 per cent, from 2.5 per cent previously; and construction at 4.9 per cent, from 4.7 per cent before.

In contrast, the forecast for wholesale and retail trade fell marginally to 1.8 per cent, from 1.9 per cent in the previous survey, which OCBC’s Ling attributed to the cooling in domestic labour market conditions.

Expected growth for accommodation and food services fell more sharply to 2.2 per cent, from 3.6 per cent before.

Activity in such consumer-facing or tourism-related sectors could slow down, given dissipating tailwinds from the post-pandemic pent-up demand for travel and in-person services, said UOB associate economist Jester Koh.

But the ongoing recovery in tourist arrivals from China, bolstered by the Singapore-China visa exemption, as well as popular concert events such as Taylor Swift’s The Eras Tour, could provide some cushion to the accommodation and F&B sectors, he said.

Meanwhile, the forecast for non-oil domestic exports stayed the same at 6 per cent.

The expected overall unemployment rate for the year was also unchanged at 2.1 per cent.

In Q1 2024, GDP is expected to rise by 2.6 per cent on year. Headline inflation for the quarter is predicted to be 3.6 per cent year on year, and core inflation is forecast at 3.4 per cent.

Some expectations of monetary policy loosening

Amid the slightly more positive growth and inflation outlooks, most respondents expect monetary policy to remain unchanged in April’s upcoming policy meeting – the second in MAS’ new schedule of quarterly rather than biannual meetings.

Only one respondent expects policy to be loosened in April, via a reduction in the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band.

In general, expectations for monetary policy loosening have shifted later into the year. In the previous survey, changes in July and October were each expected by about a fifth of respondents.

In the latest survey, some 14.3 per cent expect monetary loosening in July via a S$NEER slope reduction, and 30 per cent expect it in October.

While none of the respondents expect a re-centring of the policy band in April, one foresees it being re-centred lower in July, and one expects this in October. None expect an adjustment to the width of the S$NEER.

“A flattening of the policy slope appears to be the most likely option, albeit it may not materialise anytime soon,” said Ling.

In its two meetings in 2023, as well as its January 2024 one, MAS kept policy unchanged, after five successive tightening moves in 2021 and 2022.

External growth remains the top risk to forecasts

External growth remained the most-cited risk to forecasts – both the downside risk of a slowdown and the upside risk of better-than-expected external growth.

An external growth slowdown was named as a downside risk by half of respondents, though this was down from 81.3 per cent in the last survey. It was cited as the top risk by 28.6 per cent.

Geopolitical tensions were also flagged by half of those surveyed. It was named as the top risk by 21.4 per cent of respondents, similar to inflationary pressures.

In view of the global economic uncertainty, growth improvement will likely be fragile this year, warned DBS’ Chua.

For upside risks, 71.4 per cent highlighted better-than-expected external growth, up from 60 per cent in December.

But only 28.6 per cent of respondents thought this was the top upside risk. Instead, 42.9 per cent said it was the tech-cycle recovery – which was cited by 57.1 per cent of respondents as an upside risk in general.