SINGAPORE: While Singapore’s external environment still faces many downside risks, some bullish economists say 2018 headline economic growth could come in at between 3 and 3.5 per cent. This would be the economy’s best showing in four years and would build on the strong full year 2017 performance, which has already seen several surprises to the upside in recent quarters.
The technology and biomedical manufacturing clusters have done well, with manufacturing output recording their strongest gains in 7 months in July and August this year. “At this juncture, the external demand is stronger than expected, while the broader manufacturing sector is looking better and that is spilling over into the services sector,” said Song Seng Wun, regional economist at CIMB Private Banking. Barring unexpected outcomes in the global economy and key sectors in the domestic economy for the rest of the year, the government’s central view is that gross domestic product (GDP) growth for 2017 is likely to come in at around 2.5 per cent, within the narrowed range announced in August of 2-3 per cent. Still, private sector economists appear more bullish at this point.
“For 2017, we are looking at about 3 to 3.5 per cent growth, and for 2018, I think a very likely possibility would be the 2 to 4 per cent range,” said Selena Ling, Head of Treasury Research and Strategy at OCBC. “There could be some upside, but it is still dependent basically on how China manages its growth deceleration and some of its policy challenges in how it manages its renminbi and capital outflows,” said Ms Ling. Possible elections in Malaysia and Thailand in 2018 could also affect risk appetite for the region. CIMB’s Mr Song also said the Singapore economy could grow in the 2-4 per cent range in 2018 but thinks that a headline rate of around 3.5 per cent is possible if expected upsides come through next year.
