According to a recent survey of 19 economists by the Monetary Authority of Singapore (MAS) released yesterday, Singapore's economy is expected to expand 9% this year. This median forecast of 9% is at the upper bound of the government's own forecast of between 7% and 9% and is up from a previous survey of 6.5% done just 3 months ago.
The reasons: bigger jumps in manufacturing, exports and wholesale & retail trade. The much stronger than expected Q1 GDP print at 15.1% yoy was also factored into the latest forecast. Apparently those surveyed have also accounted for the recent developments in Europe which probably explains the wider distribution of forecast this time round which ranged from 6.5% to 12%. At the upper end of the range, Singapore's growth this year may even surpass China's. In fact, Nomura now expects Singapore to grow just slightly behind China for this year at 10.2% vs. the latter's 10.5%.
Underscoring this forecast upgrade is how Singapore's fortune is so strongly tied to the global trade cycle. The flip side of this leverage, as in any type of leverage, is higher volatility in either direction. Given the situation in Europe where governments are forced to retrench to contain debt, the dampening impact on global trade bears scrutiny.
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