Economists revised down Singapore growth forecasts and raised inflation forecasts

According to a central bank survey, released on Thursday, economists have pulled back GDP growth estimates and  have raised their inflation forecasts for Singapore. A global economic slowdown is considered the biggest threat to one of the largest trading centers in the world. 

The Monetary Authority of Singapore (MAS) surveyed 21 economists. The median forecast set by the survey was for Singapore's economic growth to increase 3.5 percent this year. In June, the growth estimate was 3.8 percent. 

Based on the median inflation forecast, consumer prices will grow by 5.7 percent in 2022, up from the previous survey's 5 percent. 

The survey was conducted by MAS in early August. At that time, the government also revised down its GDP growth forecast, and central banks around the world began to fight inflation by seeking interest rate sweet spot.

Nearly three-quarters of the survey respondents cited a growth slowdown among trading partners as the main risk to Singapore's GDP. 61.5 percent of the surveyees held the opinion that an unexpectedly rapid economic recovery in China could, on the contrary, lead to an economic growth.

The weak macroeconomic data that was recently revealed in China suggest otherwise. This is also true for Singapore manufacturing figures released last week.

As for inflation, the latest data shows that the consumer price growth seen in Singapore hit a 13-year high. The finance minister expects inflation to reach a peak in the fourth quarter of this year at the earliest.

Singapore tightened monetary policy twice this year, in January and July.

According to the survey and responses of the majority of economists, year-on-year corporate profits are projected to decline in September. In addition, as reported by respondents, home prices will go up and corporate bond spreads will remain flat.