While economists have upgraded their growth forecasts for the year, inflation is expected to worsen. But figures alone do not reflect the current sentiment of economists who believe that concerns over growth risks are looming larger than inflation.
According to a new poll by the Monetary Authority of Singapore (MAS), private sector economists expect 4.2 percent consumer price inflation this year, higher than the median projection of 3.5 percent last quarter.
On the contrary, growth expectations have improved, as the 21 economists forecasted a median growth of three percent in 2012, up from 2.5 percent in the preceding quarter.
They also expect slightly better growth of 2.8 percent in Q2, an improvement from last survey’s 2.5 percent.
However, MAS noted that “respondents expect significant downside risks to remain despite the upgrade in the growth outlook for this year”.
The upward revision could be attributed to the economy’s better-than-expected performance in Q1.
In light of this, while economists feel that inflation is expected to remain, growth is of a more immediate concern.
“Growth risks are probably starting to override inflation concerns, with Europe’s debt crisis escalating and China’s economy slowing down much more quickly than previously expected,” said Chua Hak Bin, economist at Bank of America-Merrill Lynch.
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