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Thread: Economists cut growth forecast for full year to 5.6%

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    Default Economists cut growth forecast for full year to 5.6%

    March 11, 2008

    Economists cut growth forecast for full year to 5.6%

    They expect US recession woes to hit the Republic, according to survey

    By Nicholas Fang


    ECONOMISTS are already counting the costs of the worse- ning United States economic downturn for Asian economies - Singapore, in particular.

    Investment bank Goldman Sachs has projected that a 1 percentage point decline in US consumption could hit Singapore economic growth by close to 0.6 of a percentage point.

    And a survey by the Singapore central bank has shown that economists and analysts have lowered their expectations for local economic growth this year to 5.6 per cent, from 6.3 per cent in December.

    Goldman Sachs' managing director and chief economist for Asia, excluding Japan, Mr Michael Buchanan, said economic modelling showed a direct correlation between US consumption patterns and economic growth in the region.

    Goldman's US research team has forecast a mild recession, with US gross domestic product (GDP) expected to fall by an annualised 1 percentage point in the second and third quarters and for consumption to shrink.

    'We forecast Asia's GDP growth to slow to 8.3 per cent from 9.5 per cent last year. In 2009, we look for growth to slow a touch further to 8.2 per cent,' Mr Buchanan said at a press conference yesterday.

    However, he felt that the tipping point at which the US slowdown would have a more significant impact on Asia is currently just a downside risk to Goldman's lower forecasts and not a reason to ratchet down its expectations even further.

    But a survey of 25 economists and analysts by the Monetary Authority of Singapore (MAS) showed that they have already downgraded their expectations for the Republic's economic growth this year.

    An earlier survey in December reflected expected GDP growth of 6.3 per cent this year. This was lowered to 5.6 per cent in the MAS' Survey of Professional Forecasters released yesterday.

    The survey showed that financial services, construction, and hotels and restaurants are expected to perform better than originally thought, with forecasts all revised upwards in the latest poll.

    In particular, the construction sector is expected to grow 15.9 per cent, instead of 13.5 per cent as reflected in the December survey. But manufacturing, wholesale and retail trade and non-oil domestic exports saw lowered growth forecasts.

    Based on mean probability distribution, the most likely outcome for the Singapore economy is growth of between 5 and 5.9 per cent, said the MAS. This is at the higher end of the Government's forecast range of between 4 and 6 per cent growth made earlier this year.

    The forecast for the consumer price index inflation indicator also rose to 5 per cent from 3.7 per cent, while the year-end unemployment rate is expected to fall marginally to 2 per cent from 2.1 per cent.

    Economists The Straits Times spoke to said the results of the latest survey contained no surprises.

    OCBC economist Selena Ling said the downward revisions took into account growing concerns over the risk of a US recession in the past few months. 'But this is largely in line with forecasts made earlier this year,' she said.

    United Overseas Bank economist Ho Woei Chen agreed, saying that the market had largely lowered its expectations already. 'But we have to bear in mind that 5.6 per cent growth is not bad, given the uncertainties in the world now'.

    Merrill Lynch chief Asian economist Timothy Bond has said that there are few signs of a credit crunch in Asia despite troubled global credit markets.

    In a weekly note, he wrote that a global credit contraction would affect US and European demand. This would, in turn, slow Asian exports.

    However, he does not believe that domestic bank credit markets in the region are prone to contagion as the US credit cycle turns down.

    'The market for domestic bank credit...is denominated in local currencies. Both volume and price are responsive to trends in domestic monetary policy, and bank credit is the most important source of funds for Asian consumers and firms.

    'As domestic borrowing costs fall in real terms, this supports our view that Asia stands at a very different point in its investment and credit cycle compared to the US,' he said.

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    Default Re: Economists cut growth forecast for full year to 5.6%

    Published March 11, 2008

    Economists trim S'pore Q1 growth forecast to 5.7%

    Q2 may see another dip before rebound kicks in; inflation likely to rise

    By ANNA TEO


    (SINGAPORE) Private sector economists have pared their forecasts of Singapore's first quarter GDP growth to a median 5.7 per cent, from 7 per cent three months earlier.

    Economic growth is then expected to dip below 5 per cent in Q2 and Q3 before rebounding in the final quarter for a year-round median of 5.6 per cent, according to forecasters polled by the Monetary Authority of Singapore.

    The 19 economists who took part in the survey last month - soon after the 2007 economic results were released - trimmed their forecasts following slower than expected Q4 and 2007 figures.

    The economy grew 5.4 per cent in Q4 - well below median forecasts of 7.7 per cent in the December 2007 poll. Year-round GDP growth was 7.7 per cent - also below market forecasts of about 8 per cent.

    According to the latest poll findings, Singapore's 2008 economic growth will 'most likely' come in between 5 and 5.9 per cent - a full point below the range most expected in the previous poll.

    But apparently, not everyone is too bearish. Forecasts for Q1 growth actually hit 8.8 per cent at the top end and average 5.8 per cent, only one point above the lowest estimate.

    The second quarter is expected to see the year's lowest growth of around 4.4 per cent, before a pick-up to 4.8 per cent in Q3 and 6.8 per cent in Q4, according to the median estimates.

    Meanwhile, the 2008 consumer inflation rate is projected to rise to 5 per cent on average. Some economists see it hitting 7 per cent in Q1, with the median forecast a bit lower at 6.3 per cent.

    As for the exchange rate, the forecasts see the Singapore dollar strengthening to 1.32 per US dollar by year-end, though the estimates centre around 1.38, close to the current rate.

    Goldman Sachs' view on the Singapore economy is probably fairly typical of the market's at this point.

    The investment bank's regional economists recently cut their forecasts of Singapore's 2008 GDP growth to 5.5 per cent, from 6.4 per cent, 'on the back of increased external risks', chiefly a global slowdown led by a US recession.

    But they expect the domestic growth engine to keep 'chugging along', supported by easier monetary conditions and an expansionary fiscal stance.

  3. #3
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    Default Re: Economists cut growth forecast for full year to 5.6%

    OH ITS ALL HAPPENING....

  4. #4
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    Default Re: Economists cut growth forecast for full year to 5.6%

    Quote Originally Posted by Unregistered
    OH ITS ALL HAPPENING....
    Yes it is.
    5.6% growth.
    Not bad!

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