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Analysts unflinching in GDP growth forecasts despite economic growth

Posted by Property Launch Invest on Friday, 16 October 2015 in Property News

They say the increase was surprising, but insufficient.

The worsening outlook of the economy has given analysts reason to be surprised when the results came and revealed that the city-state has narrowly dodged a technical recession.

However, analysts believe the growth wasn’t enough to make a significant splash.

According to analysts from HSBC, the decision of the MAS to slightly ease the policy is based on its view that growth in 2015 and 2016 will be below previous forecasts.

HSBC said more aggressive easing could have been implemented if not for the view that core inflation would rise next year.

“However, the MAS downgraded its language on inflation and dropped the reference to tight labour markets, suggesting a lower bar for future easing,” HSBC said.

“There is a risk that the final reading of GDP may be revised downwards, given the deterioration in September data. That said, we don’t see the MAS making further tweaks to policy through next year, barring a downturn in growth and signs that GDP in 2016 is set to come in significantly below 2.0%,” they added.

Meanwhile, analysts from UOB has also downgraded their 2015 GDP growth forecasts to 2.0% from 2.5% earlier.

“Singapore’s external demand remained weak, while the domestic sectors continue to face the challenges from the ongoing economic restructuring amid tight labour market conditions. Economy-wide labour productivity remained weak since the labour productivity reform started in 2011,” UOB said.

“The dovish central bank actions around the world and the global disinflationary trend had resulted in a decline in Singapore’s export competitiveness, as well as the importation of global deflation onto its shores. It is hopeful that the slight adjustment to the rate of the SGD NEER appreciation will go some way in boosting export competitiveness in the months ahead,” they added.

Source: Singapore Business Review 16th October 2015

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Analysts unflinching in GDP growth forecasts despite economic growth

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