MAS Survey of Professional Forecasters: March 2021

1 MAS Survey of Professional Forecasters: December 2006

Monetary Authority of Singapore Economic Policy Department March 2021

2 MAS Survey of Professional Forecasters: March 2021

Monetary Authority of Singapore Economic Policy Group

The Mar 2021 Survey was sent out on 15 February 2021 to a total of 26 economists and analysts who closely monitor the Singapore economy. This report reflects the views

received from 24 respondents (a response rate of 92.3%) and does not represent MAS’ views or forecasts.

GDP declined less than expected in Q4 2020

The Singapore economy contracted by 2.4% in Q4 2020 compared with the same period last year. This

was a smaller decline than the respondents’ forecast of a 4.5% fall in the previous survey. In the current survey, the respondents expect the economy to shrink by 1.1% year-on-year in Q1 2021.

Chart 1 Quarterly GDP Growth

The economy is forecast to grow by 5.8% in 2021

The respondents expect GDP to expand by 5.8% in 2021, slightly above the 5.5% forecast in the previous survey.

Table 1

Median Forecasts of Macroeconomic Indicators for 2021

Key Macroeconomic Indicators Year-on-Year % Change

December Survey

Current Survey

GDP 5.5 5.8

Manufacturing 4.5 4.7

Finance & Insurance 5.1 5.8

Construction 28.4 22.5

Wholesale & Retail Trade 5.0 4.5

Accommodation & Food services 15.0 11.0

Private Consumption 8.5 7.9

Non-oil Domestic Exports 4.0 6.9

2017 2018 2019 2020 2021 Q1

-15

-10

-5

0

5

10

YO

Y %

Gro

wth

Actual Outcome Median Forecast

Forecast

MAS Survey of Professional Forecasters: March 2021 3


As reflected by the mean probability distribution, the most likely outcome is for the Singapore economy to grow by 5.0 to 6.9% (encompassing two growth ranges) this year, with a combined probability of

61.8%. In the previous survey, the most likely outcome for 2021 was projected to be 5.0 to 5.9%, with an average probability of 27.9%.

Chart 2 Mean Probability Distribution of 2021 GDP Growth Forecasts

GDP is projected to expand by 3.8% in 2022

The respondents estimate that GDP will grow by 3.8% in 2022, and assigned the highest probability to

the 3.0 to 3.9% range.

Chart 3 Mean Probability Distribution of 2022 GDP Growth Forecasts

0

10

20

30

40P

rob

abil

ity

(Pe

r C

ent

)

GDP (YOY % Growth)

Mar 2021 Projections Dec 2020 Projections

0

10

20

30

Pro

bab

ilit

y (P

er

Ce

nt)

GDP (YOY % Growth)

Mar 2021 Projections



CPI-All Items inflation is forecast at 0.9% in 2021, while MAS Core Inflation is expected to come in at 0.7%

CPI-All Items inflation and MAS Core Inflation in Q1 2021 are expected to come in at 0.4% and

0.1%, respectively. The median CPI-All Items inflation for the whole of 2021 is forecast to be 0.9%, up

from 0.6% in the December survey. Similarly, the median forecast for MAS Core Inflation in 2021 has risen, to 0.7% from 0.6% previously. As for the labour market, the respondents expect the

unemployment rate to reach 2.9% at year-end, down from 3.0% in the previous survey.

Table 2

Median Forecasts of Other Economic Indicators for 2021

Indicators December

Survey

Current

Survey

CPI-All Items (year-on-year % change) 0.6 0.9

MAS Core Inflation (year-on-year % change) 0.6 0.7

Overall Unemployment Rate (end-period, SA %) 3.0 2.9

Exchange Rate (end-period, S$ per US$) 1.315 1.300

3-month S$ SIBOR (end-period, percent per annum) 0.4 0.41

Bank Loans (end-period, % growth) 2.5 3.4

The respondents project that CPI-All Items inflation will most likely fall in the range of 1.0 to 1.4% in

2021. In the previous survey, respondents had assigned the highest probability to the 0.5 to 0.9% range. Meanwhile, MAS Core Inflation is expected to come in between 0.5 and 0.9%. Respondents had

also assigned the highest probability to this range in the previous survey.

Chart 4

Mean Probability Distribution of 2021 Inflation Forecasts

0

10

20

30

40

50

60

Pro

bab

ility

(P

er

Ce

nt)

CPI-All Items Inflation (%)

Mar 2021 Projections Dec 2020 Projectio ns

0

10

20

30

40

50

60

Pro

bab

ility

(P

er

Ce

nt)

MAS Core Inflation (%)

Mar 2021 Projections Dec 2020 Projectio ns



Both inflation measures are forecast to be higher next year

CPI-All Items inflation is forecast at 1.1% in 2022, while MAS Core Inflation is expected to come in at 1.2%. Respondents assigned the highest probability to the 1.0 to 1.4% forecast range for both inflation

measures.

Chart 5

Mean Probability Distribution of 2022 Inflation Forecasts

0

10

20

30

40

50

Pro

bab

ility

(P

er

Ce

nt)

CPI-All Items Inflation (%)


0

10

20

30

40

50

Pro

bab

ility

(P

er

Ce

nt)

MAS Core Inflation (%)




Corporate and financial indicators

Of the respondents1 who provided inputs, half expect corporate profits to increase year-on-year in Q1 2021, while a quarter see profits remaining stable and the rest expect a decline. Meanwhile, three-

quarters of respondents anticipate that private residential property prices will pick up in Q1 2021

compared to Q4 2020, while 12.5% expect prices to remain stable and the remainder forecast a decline. Finally, half of the respondents assess that SGD corporate bond spreads will remain stable in Q1, while

37.5% believe they will narrow and 12.5% expect an increase.

For the whole of 2021, all respondents expect corporate profits to increase, three-quarters forecast that private residential property prices will pick up, and half expect bond spreads to remain stable.

Respondents were also generally upbeat about the prospects for corporate profitability and private

residential property prices next year, and 75.0% expect corporate bond spreads to remain stable.

Table 3 Expectations for Key Corporate and Financial Indicators for 2021

Percentage of total respondents

Indicators December Survey Current Survey

Higher Stable Lower Higher Stable Lower

Corporate Profitability 87.5 12.5 0.0 100.0 0.0 0.0

Private Residential Property Price Index 62.5 37.5 0.0 75.0 25.0 0.0

SGD Corporate Bond Spreads (end-period, basis points per annum) 28.6 14.3 57.1 12.5 50.0 37.5

Table 4 Expectations for Key Corporate and Financial Indicators for 2022

Percentage of total respondents

Indicators December Survey Current Survey

Higher Stable Lower Higher Stable Lower

Corporate Profitability N.A. N.A. N.A. 87.5 12.5 0.0

Private Residential Property Price Index N.A. N.A. N.A. 75.0 25.0 0.0

SGD Corporate Bond Spreads (end-period, basis points per annum) N.A. N.A. N.A. 12.5 62.5 25.0

1 Some of the respondents provided inputs. Percentages are calculated as shares of these responses.



Drivers of financial and lending market conditions

As in the previous survey, tighter global financial conditions, an escalation in the global COVID-19 situation, as well as a rise in geopolitical (including trade-related) tensions were cited as the top three

factors that could potentially weigh on financial market and lending conditions in Singapore.

Meanwhile, 75.0% of respondents identified easing global financial conditions as a factor that could

drive an improvement in domestic financial market and lending conditions. A third of respondents also cited effective COVID-19 containment (e.g. through rapid vaccine disbursement) as a potential upside

driver, while 16.7% flagged capital inflows and a weaker S$NEER.

Table 5

Top 3 Drivers of Financial and Lending Market Conditions

(Proportion of Respondents, %)

Downside Drivers December

Survey

Current

Survey Upside Drivers

December

Survey

Current

Survey

Global Financial Conditions Tightening 100.0 84.6

Global Financial Conditions Easing 50.0 75.0

COVID-19 Escalation 40.0 23.1 COVID-19 Containment 50.0 33.3

Geopolitical Tensions 30.0 23.1 Capital Inflows 20.0 16.7

Weaker S$NEER 20.0 16.7



Risks to the outlook for the Singapore economy

A further deterioration in the COVID-19 situation, due to new outbreaks or delays in vaccine deployment, again topped the list of downside risks to Singapore’s growth outlook identified by respondents2, with

94.4% of respondents citing it and 77.8% ranking it as the most important downside risk. Respondents

were also concerned about geopolitical risks, including those stemming from US-China tensions. These risks were identified by 50.0% of respondents, up from 44.4% in the previous survey. Finally,

respondents cited downside risks related to an earlier-than-expected pullback in macroeconomic policy support globally, resulting in a premature tightening in global financial conditions and weaker demand

due to fiscal consolidation. This risk was identified by 44.4% of respondents, the same proportion as in the previous survey.

Meanwhile, the containment of the COVID-19 outbreak, attributable primarily to an acceleration in the pace of vaccine deployment globally, again emerged as the most frequently cited upside risk to

Singapore’s growth outlook, with 77.8% of respondents listing it and 61.1% ranking it as the top upside risk. Respondents also identified stronger-than-expected manufacturing sector performance, driven for

instance by robust global demand for electronics, as an upside risk. This was cited by 50.0% of

respondents, up from 22.2% in the previous survey. In addition, respondents highlighted the prospect of re-opening borders to international travel, as well as stronger-than-expected global growth, as key

upside risks.

Table 6 Top 3 Potential Risks to the Singapore Economy

(Proportion of Respondents, %)

Downside Risk

December Survey

Current Survey

Cited As Top

Risk Upside Risk

December Survey

Current Survey

Cited As Top

Risk

COVID-19 Escalation 88.9 94.4 77.8

COVID-19 Containment 83.3 77.8 61.1

Geopolitical Tensions 44.4 50.0 11.1

Manufacturing/Tech Cycle 22.2 50.0 5.6

Insufficient stimulus 44.4 44.4 5.6

Re-opening Borders 44.4 44.4 11.1

External Growth 11.1 44.4 16.7

Qualitative Word Responses (Word Cloud)

2 Most of the respondents provided inputs. Percentages are expressed as shares of these responses.



APPENDIX: SUMMARY TABLES

Table A.1

Key Macroeconomic Indicators for Q4 2020

Key Macroeconomic Indicators Year-on-Year % Change (unless otherwise stated)

Median Forecast December Survey

Actual Outcome

GDP −4.5 −2.4



Construction −38.3 −27.4

Wholesale & Retail Trade −3.5 1.2

Accommodation & Food services −20.0 −19.3

Private Consumption −9.6 −11.3

Non-oil Domestic Exports −0.7 −0.5

CPI-All Items −0.3 −0.1

MAS Core Inflation −0.2 −0.2



3-month S$ SIBOR (end-period, % per annum) 0.40 0.41

Bank Loans (end-period, % growth) −1.0 −2.0

Table A.2

Key Macroeconomic Indicators for 2020


Median Forecast December Survey

Actual Outcome

GDP −6.0 −5.4



Construction −36.2 −35.9

Wholesale & Retail Trade -5.0 −3.7

Accommodation & Food services −27.0 −26.6

Private Consumption −13.4 −14.1

Non-oil Domestic Exports 4.2 4.3

CPI-All Items −0.3 −0.2

MAS Core Inflation −0.2 −0.2



3-month S$ SIBOR (end-period, % per annum) 0.40 0.41

Bank Loans (end-period, % growth) −0.7 −2.0



Table A.3

Forecasts of Key Macroeconomic Indicators for Q1 2021

Table A.4

Forecasts of Key Macroeconomic Indicators for 2021


Median Mean Min Max

GDP −1.1 −0.9 −2.7 0.7

Manufacturing 3.7 4.8 −0.9 10.3

Finance & Insurance 4.0 3.9 1.5 5.6

Construction −22.5 −19.6 −25.0 −3.8

Wholesale & Retail Trade 2.0 3.2 1.4 8.7

Accommodation & Food services −4.5 −0.7 −15.0 23.0

Private Consumption −5.0 −5.7 −11.4 −0.6

Non-oil Domestic Exports 4.1 4.6 −6.7 15.0

CPI-All Items 0.4 0.4 0.1 0.8

MAS Core Inflation 0.1 0.1 −0.1 0.5

Overall Unemployment Rate (end-period, SA %) 3.2 3.1 2.8 3.5

Exchange Rate (end-period, S$ per US$) 1.320 1.324 1.305 1.350

3-month S$ SIBOR (end-period, % per annum) 0.40 0.38 0.12 0.46

Bank Loans (end-period, % growth) −0.7 −0.1 −1.1 3.5


December Survey

Current Survey

Median Median Mean Min Max

GDP 5.5 5.8 5.9 4.5 7.5

Manufacturing 4.5 4.7 5.3 0.8 11.3

Finance & Insurance 5.1 5.8 5.7 3.0 8.6

Construction 28.4 22.5 21.8 −7.0 63.6

Wholesale & Retail Trade 5.0 4.5 4.4 −0.4 8.7

Accommodation & Food services 15.0 11.0 12.4 2.5 34.7

Private Consumption 8.5 7.9 7.4 −5.0 15.1

Non-oil Domestic Exports 4.0 6.9 5.6 1.0 9.6

CPI-All Items 0.6 0.9 0.9 0.3 1.4

MAS Core Inflation 0.6 0.7 0.7 0.5 1.1

Overall Unemployment Rate (end-period, SA %) 3.0 2.9 2.9 2.5 3.5

Exchange Rate (end-period, S$ per US$) 1.315 1.300 1.301 1.280 1.341

3-month S$ SIBOR (end-period, % per annum) 0.40 0.41 0.42 0.12 0.70

Bank Loans (end-period, % growth) 2.5 3.4 2.9 0.3 6.0



Table A.5

Forecasts of Quarterly GDP Growth for 2021

Table A.6

Forecasts of GDP Growth and CPI-All Items Inflation for 2022

Key Macroeconomic Indicators Median Mean Min Max

Year-on-Year % Change

GDP 3.8 4.4 2.9 8.0

CPI-All Items 1.1 1.1 0.7 1.5

MAS Core Inflation 1.2 1.2 0.9 1.8

Period under Forecast Median Mean Min Max

Year-on-Year % Change

2021 Q1 −1.1 −0.9 −2.7 0.7

2021 Q2 14.6 14.4 10.3 17.4

2021 Q3 6.5 6.7 4.8 8.1

2021 Q4 4.6 4.5 1.5 7.6



Table A.7

Mean Probabilities Attached to Possible Outcomes in GDP Growth

Table A.8

Mean Probabilities Attached to Possible Outcomes in CPI-All Items Inflation

Table A.9

Mean Probabilities Attached to Possible Outcomes in MAS Core Inflation

Forecasts for 2021 Forecasts for 2022

Growth Range

Year-on-Year Change

Probabilities

(%)

Growth Range

Year-on-Year Change

Probabilities

(%)

2.0% or more 1.7 2.0% or more 2.9

1.5 to 1.9% 4.6 1.5 to 1.9% 21.7

1.0 to 1.4% 24.2 1.0 to 1.4% 43.8

0.5 to 0.9% 47.1 0.5 to 0.9% 25.4

0.0 to 0.4% 20.3 0.0 to 0.4% 5.0

−0.5 to −0.1% 2.1 −0.5 to −0.1% 0.8

−1.0 to −0.6% 0.1 −1.0 to −0.6% 0.3

−1.5 to −1.1% 0.1 −1.5 to −1.1% 0.2

−2.0 to −1.6% 0.0 −2.0 to −1.6% 0.0

−2.5 to −2.1% 0.0 −2.5 to −2.1% 0.0

Less than −2.5% 0.0 Less than −2.5% 0.0

Total 100.0 Total 100.0


Growth Range

Year-on-Year Change

Probabilities

(%)

Growth Range

Year-on-Year Change

Probabilities

(%)

8.0% or more 1.5 6.0% or more 12.9

7.0 to 7.9% 9.6 5.0 to 5.9% 15.9

6.0 to 6.9% 30.9 4.0 to 4.9% 20.3

5.0 to 5.9% 30.9 3.0 to 3.9% 28.4

4.0 to 4.9% 18.9 2.0 to 2.9% 16.0

3.0 to 3.9% 5.5 1.0 to 1.9% 4.5

2.0 to 2.9% 1.9 Less than 1.0% 2.0

Less than 2.0% 0.9



Growth Range

Year-on-Year Change

Probabilities

(%)

Growth Range

Year-on-Year Change

Probabilities

(%)

2.0% or more 1.9 2.0% or more 10.4

1.5 to 1.9% 8.9 1.5 to 1.9% 28.9

1.0 to 1.4% 38.2 1.0 to 1.4% 32.5

0.5 to 0.9% 32.1 0.5 to 0.9% 20.4

0.0 to 0.4% 14.3 0.0 to 0.4% 5.7

−0.5 to −0.1% 4.1 −0.5 to −0.1% 1.8

−1.0 to −0.6% 0.2 −1.0 to −0.6% 0.1

−1.5 to −1.1% 0.1 −1.5 to −1.1% 0.1

−2.0 to −1.6% 0.1 −2.0 to −1.6% 0.1

−2.5 to −2.1% 0.0 −2.5 to −2.1% 0.0

Less than −2.5% 0.0 Less than −2.5% 0.0


MAS Survey of Professional Forecasters: March 2021

Documents

Transcript of MAS Survey of Professional Forecasters: March 2021