Singapore: Growth outlook revised lower – UOB

Economist Barnabas Gan at UOB Group gives his views on both the economic growth prospects and the MAS stance for the current year.

Key Quotes

“Singapore’s GDP rose 1.0% on a year-on-year basis in the fourth quarter of 2019, according to the Ministry of Trade and Industry (MTI). On a quarter-on-quarter seasonally adjusted basis, it expanded 0.6%. Accounting for the latest data, Singapore’s economy grew 0.7% in 2019.”

“With the onset of the COVID-19 outbreak, MTI downgraded Singapore’s growth outlook to a range of -0.5% to +1.5% for 2020, with growth expected to come in at around 0.5%.”

“Considering the impact of the COVID-19 outbreak, we had previously shaded GDP growth to a range of +0.5% to +1.0% in 2020, vs. +1.5% projection prior to the outbreak. We are trimming our forecast down to 0.5% in 2020 with downside risk, especially if the virus outbreak progresses to be more widespread, severe and protracted than anticipated.”

“The Monetary Authority of Singapore (MAS) is scheduled to announce its monetary policy decision in April 2020. Owing to the uncertain backdrop and weakened growth outlook, we now expect policy-makers to ease policy to neutral, down from a currently perceived +0.5% appreciation slope.”