On a sectoral basis, the market watchers are looking at an expansion in sectors such as manufacturing (+5.8%), finance and insurance (+4.6%) and non-oil domestic exports (+4.2%). This comes on the back of the growth registered by these sectors in the 3Q2020 ended September.
Conversely, they are looking at contractions in construction (-36.2%), accommodation and food services (-27.0%) and private consumption (-13.4%), as these sectors have been among the worst hit by the pandemic.
Given these movements, market watchers predict that unemployment will hit 3.7% in 2020, up from the 3.5% predicted in the September survey.
Meanwhile, inflation expectations have moderated since the September survey to -0.3% for headline inflation – the measure of total inflation – and -0.2% for core inflation – the price gauge excluding transport and accommodation.
This is down from the -0.4% for headline and 0.3% for core inflation predicted previously.
Come next year, both metrics are expected to come in at 0.6%, with respondents assigning the highest probability to the 0.5% to 0.9% range.
Against this backdrop, the respondents expect the MAS to strengthen the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) to $1.34 per USD against $1.37 forecast previously.
For now, it is hard say when Singapore’s economy will return to pre-Covid levels given the uncertainty in the global economy.
The tremors of the Covid-19 health-turned-economic crisis – unsurprisingly – topped the list of downside risks identified by the survey respondents. This is as any further waves of coronavirus infections or delays in the development of a vaccine will cause further disruptions to global supply chains, business operations and employment.
Insufficient stimulus was another concern flagged as respondents were weary that an earlier-than-expected pullback in macroeconomic policy support globally may result in a premature tightening in global financial conditions.
Others expressed concern over a possible escalation in trade tensions between the US and China.
On the flipside, the respondents note that a containment of Covid-19 and a resultant re-opening of borders and further fiscal stimulus could boost Singapore’s economic growth.
Additionally, they note that the manufacturing sector is slated to log stronger-than-expected performance due to higher electronics and pharmaceuticals production.
