Singapore emerging from the economic trough: ANZ

SINGAPORE - ANZ Bank is expecting the Singapore economy to contract by 5.9% in 2020 -- but sees a stronger rebound taking hold over the early part of 2021, leading to GDP growth of 4.6% for 2021.

"This assumes there are no second-wave COVID-19 infections, either in Singapore or globally," the bank says.

"While the economic impact from the pandemic has been severe, we believe we are past the low point.

"Activity is starting to increase as restrictions ease, and should pick up further when the 'circuit breaker' period ends on June 1."

ANZ says it has factored in only a modest recovery over the second half of this year, due to the phased approach to re-opening the economy, ongoing labour supply constraints for sectors reliant on foreign workers, and a poor external backdrop.

"We expect the Monetary Authority of Singapore to maintain the current neutral policy stance at its October meeting. Monetary policy will continue to play a supporting role to fiscal policy, which now amounts to 19.2% of GDP.

ANZ is forecasting the Singapore dollar to weaken to 1.44 against the USD by the end of the year. It says subdued demand pressures and low global oil prices will see inflation stay negative on average for 2020, on both the headline and core measures.

www.live.anz.com (ATI).