Singapore central bank projects softer growth

SINGAPORE • Singapore’s economy will slow in 2019, reflecting a weakening in key trading partners and a further cooling of the electronics sector, the central bank said.

The city-state is set to expand slightly below the midpoint of a 1.5%3.5% forecast range for this year after growing 3.2% in 2018, the Monetary Authority of Singapore (MAS) said in its Macroeconomic Review last Friday.

The expansion will come in slightly below Singapore’s potential growth after two years of outpacing that yardstick, the report stated.

“Global growth eased considerably in the fourth quarter of 2018 as a deceleration in China rippled out to other economies via weaker trade flows, exacerbated by trade tensions,” according to the report, which is released twice a year and contextualises MAS policy decisions. “This has carried over into 2019.”

Inflation should also step down this year, due to domestic electricity market liberalisation, more subdued oil prices and generally benign external price pressures, the report said.

The authority’s core inflation gauge is set to slide to the middle of a revised 1% to 2% range. The more subdued forecasts reflect a global outlook that has soured since the end of last year.

The MAS sees slower domestic growth heavily influenced by weakening in its key trading partners.

At the same time, Singapore’s labour market should remain firm on the back of a broadening in employment growth in the second half of last year.

The MAS sees particular strength in information and communications technology roles amid a national push for digitalisation. — Bloomberg