Singapore growth forecast lowered

But the picture is not all gloomy, as they are also tipping lower inflation this year and a lift in economic growth next year.

The view from the private sector is that the economy will grow by 2.3 per cent this year, according to a poll of 22 economists and analysts by the Monetary Authority of Singapore (MAS) last month.

This is down from the 2.8-per-cent growth they predicted three months ago, MAS said yesterday. The official forecast is for 1 per cent to 3-per-cent expansion this year.

Economists said yesterday that the uncertain global outlook and local restructuring efforts are likely to weigh on the two biggest sectors – manufacturing and trade – more than previously thought.

According to the MAS poll, economists are now project manufacturing to expand by 1.2 per cent, a third of their earlier estimate.

They also tip wholesale and retail trade to grow by 0.9 per cent, just half the previous prediction.

Manufacturing makes up about a fifth of the economy, while wholesale and retail trade accounts for another 17 per cent.

“The growth trajectory for the entire year has been lowered due to weaker-than-expected growth in the first quarter,” said DBS economist Irvin Seah. He cut his full-year growth forecast in April from 3.2 per cent to 2.5 per cent.

The main drag has been factory output, which slumped early this year due to a slowdown in China, the recession in Europe and weak economic data in the United States, said Seah. This led Singapore’s economy to grow just 0.2 per cent in the first quarter over a year ago, less than economists had tipped.

In the second quarter, economists expect a faster expansion of 1.5 per cent from a year ago, although this is lower than the 2 per cent previously projected. With manufacturing showing signs of revival, economists such as UOB’s Francis Tan are looking to a stronger economic rebound in the second half of the year. He kept to his 2013 growth forecast of 3 per cent, believing factory output will pick up pace.