Singapore MAS GDP forecast seems optimistic

Singapore Dollar was in top five performers in Asia during November. There is continued disinflationary pressure, however SGD showed resilience.

CPI inflation came in below expectations in October and dropped unexpectedly. The headline inflation declined from - 0.6%y/y to -0.8% . The core CPI drooped to 0.3%.

Q3 final GDP growth revised from 1.4% to 1.9%. This would not feed through into Q4 GDP growth. Q4 started on a weak footing with retail sales in October slowed their growth to 2.7% and very weak November trade data.

The annual domestic exports of non oil products contracted and annual electronic exports growth rose much slow than anticipated.

"We continue to think there are downside risks to MAS's forecasts that core CPI inflation will rise over the course of 2016 from 0.5% to 2.0% and headline inflation to range -0.5% - 0.5%. Likewise, its forecast for GDP growth to expand from 1.4% to 2-2.5% in 2015 and 2016 seems coptimistic given the slowdown in China, Malaysia and the EU, its top three trading partners", says RBC Capital Markets in a research note.