MAS poll points to 5.5% growth in 2010

Estimate of this year’s contraction falls to 2% from 3.6% a quarter ago

THE economy is likely to grow 4.7 per cent in the current quarter before picking up pace in the first half of next year, with growth averaging 5.5 per cent in 2010, according to a poll of market economists.

The Monetary Authority of Singapore’s latest survey of professional forecasters – conducted the day the third-quarter economic results were released last month – has the median estimate of the current Q4 growth at 4.7 per cent, within a wide 1.2 to 7.5 per cent range.

The 20 economists who responded to the survey also now see the economy contracting 2 per cent in 2009. This compares with a median forecast of a 3.6 per cent decline from the previous poll a quarter earlier.

The official forecast for 2009 has now been narrowed to a half-point range – contraction of between 2 and 2.5 per cent. But some economists reckon that there’s a good chance – close to 50 per cent probability – that the GDP decline this year could be smaller than 2 per cent.

In any case, the focus would have moved on to 2010, where the first quarter is expected to gain from a low-base effect – the economists’ forecasts range from 5 to 11.4 per cent, with a 9.6 per cent median.

Q1 2009 was the weakest quarter during the recent downturn: GDP shrank 9.5 per cent year-on-year, though in momentum terms, the pace of the decline was easing. It was the fourth and final negative quarter in sequential terms.

The economists’ forecasts see GDP growth easing to 6 and 3.7 per cent over the next quarters, before picking up again to 5 per cent in Q4 2010.

Full-year growth is now projected at 5.5 per cent for 2010, one point higher than the median forecast from the September survey.

Meanwhile, the consumer price inflation rate is expected to jump sharply from an estimated 0.3 per cent in 2009 to 1.5 per cent next year.

The economists also now expect the 2009 unemployment rate to be 3.4 per cent by year-end – lower than the 3.8 per cent forecast from the earlier poll. The jobless figure is also expected to further ease to 3 per cent by the end of 2010.

Source : Business Times – 10 Dec 2009