Economists have slashed their forecast for the growth of Singapore economy in 2016 and 2017 in line with the weak global fundamentals and a sustained downward shift in GDP and export expansion in the trade-reliant country.
According to the latest survey by the Singapore central bank, private economists projected that growth would drop to 1.4 percent this year compared with a previous forecast of 1.8 percent growth. For 2017, the projected growth rate is a marginally faster 1.5 percent. Previous estimates of 2017 growth were pegged at 1.8 percent.
The Monetary Authority of Singapore (MAS) survey, published on Wednesday, revealed that weakness in sectors such as finance and insurance, construction and wholesale as well as retail trade would push the growth numbers down.
Adding more worry, the surrey revealed that exports will be hit harder than expected. Non-oil domestic exports are expected to see a 4.4 percent contraction, compared an earlier forecast of 3.6 percent shrinking.
In November, data revealed Singapore's economy contracted 2 percent in the third quarter and exports slumped 5.4 percent, raising the risk of a recession. Following poor trade and GDP numbers, the Ministry of Trade and Industry slashed the 2016 growth expectations for the economy. MTI said the island nation's economy is expected to grow 1.0-1.5 percent this year, compared with the previous projection of 1.0-2.0 percent growth.
Along with a continued drop in exports, the domestic consumption has also remained anemic, raising concerns that the downturn has legs.
Economists had earlier warned that a continued slack in exports and a protectionist Donald Trump presidency in the US would push Singapore's economy into a recession. Singapore's exports declined 12 percent in October, faring worse than expected and adding to the pain of a 5 percent fall in September.
The latest exports data raised the risk of a recession, an economist for RBS in Singapore told Reuters on Thursday. "What this number highlights to us is that the cyclical slowdown is also much bigger than what we have been predicting," the bank said in a note.
On Tuesday, the ManpowerGroup said in its latest Employment Outlook report that job prospects in Singapore, which is at the lowest point since the 2009 recession, is not getting any better.
The report said only 15 percent of employers in Singapore plan to increase headcount in the first three months of 2017. While 7 percent would want to cut jobs, 71 percent expect no change in recruitment early in 2017. Hiring sentiments will remain cautious in the next three months, the report added.