SINGAPORE: The local economy “is not expected to pick up significantly in the near term”, the MAS said, while laying out its forecast for gross domestic product (GDP) growth to come in at the lower end of the 1 to 2 per cent range this year and only slightly higher in 2017.
Lacklustre external demand and weak global trade remain key factors weighing on Singapore’s trade-reliant economy. In 2017, the global economy is expected to expand at a “steady but still mediocre pace”, the central bank said.
While the risk of a major global downturn has subsided somewhat, external demand will continue to be uneven across a number of Singapore’s key export markets, the MAS added. In addition, growth in some trading partners, including the United States, will be largely supported by domestic consumption which tends to be less import-intensive, it noted.
In Asia, a similar story of domestic demand cushioning growth amid flagging exports is also playing out. As such, the MAS expects the short-term economic outlook for Asia ex-Japan to remain stable but sub-par compared to the period before the 2008 global financial crisis, with growth expected at 4.5 per cent in 2016 and 4.6 per cent in 2017.
Given the lingering sluggish global economic backdrop, growth in Singapore’s trade-related industries is likely to be constrained, even though there are signs that weakness in particular segments seems to be reaching a trough, the MAS said.