Economists slash growth forecast to 0.6%: Poll
They cite US-China trade tensions as top concern
Private sector economists have slashed their growth forecasts for the economy this year.
They have cut estimates from the 2.1 per cent tip made in June to just 0.6 per cent in light of worsening economic conditions and geopolitical risks, in a poll of 23 private sector economists and analysts by the Monetary Authority of Singapore in its quarterly survey.
The lower forecast is in line with official estimates, which have been dialled back from an annual growth of between 1.5 per cent and 2.5 per cent to between 0 per cent and 1 per cent.
This revision came as second-quarter growth slowed to 0.1 per cent from 1.1 per cent in the previous three months.
In the survey released yesterday, experts said they expect year-on-year growth of 0.3 per cent in the third quarter, and cited further escalation of trade tensions between the US and China as their top concern.
An economic slowdown in China triggered by trade issues and domestic financial market instability also continued to be a concern. Geopolitical risks in places such as Hong Kong and the Persian Gulf were widely cited as well.
Associate Professor Lawrence Loh, from the National University of Singapore Business School, said: "Singapore, as an open economy, is particularly vulnerable to external shocks. The world now is going through a most unprecedented tumultuous period, politically and economically.
"The critical downside risk for Singapore relates to businesses that rely on the global environment, especially those in export-oriented industries."
But he added that the withdrawal of the extradition Bill by Hong Kong leader Carrie Lam yesterday can be a turning point.
He said: "It's a significant concession before the protests degenerate past the point of no return. It is the start of the restoration of normal governance and stability, which augurs well for the regional and global economies."
On the upside, economists said easing trade tensions could bolster growth here. However, the survey report said they believed such an outcome is becoming less likely. Other potential benefits could come in the form of fiscal stimulus and changes to monetary policy such as lower interest rates in developed markets.
The economists downgraded their forecasts for most sectors, including manufacturing, construction, wholesale and retail trade, accommodation and food services, and non-oil domestic exports.
They were most pessimistic about non-oil domestic exports, expecting shipments to contract by 9.2 per cent year on year, far worse than their June prediction of a 2.1 per cent decline.