Economist, Centennial Asia Advisors

Nigel Chiang

Centennial Asia Advisors deliver timely and accurate economic and political analysis to investors, focused on anticipating key turning points that affect the client’s interests in the Asia-Pacific region. Clients include public agencies and central banks, as well as fund managers and investment banks. The company draws strength from its flexibility to tailor products to fit client’s specific interests. It provides detailed macro-economic forecasts, scenario analysis and timely assessments of how specific major economic and political developments may affect a client’s areas of interest. At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way.

Economist

Singapore: Snag in Succession Points to Deeper Weaknesses in Political System

Singapore: Further Scope For Growth Surprises

Singapore: Trade-Led Upturn to Accelerate

A Prudent, Safe Budget, But Is It What Singapore Needs?

Singapore: Sizable Labour Market Slack Despite Growth Rebound in 2021

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

<ul style="list-style-type: square;">
<li>We remain relatively sanguine over the external outlook in the near-term, despite the less vibrant trade print from February.</li>
<li>However, further improvement in the labour market will likely be slow as a full recovery in the virus-sensitive sectors e.g. tourism and aviation is pushed out to 2H22, and hiring sentiment in manufacturing possibly staying muted despite strong output due to the narrow pattern of growth that is led by the electronics-related sectors.</li>
<li>Assuming a long-run potential growth rate of 2%, with hysteresis or economic “scarring” effects partially but not fully offset by more robust fixed investment commitments and the slight bump up in labour productivity in 2020-21, <strong>our full-year GDP growth forecast of +6.6% in 2021 still implies a material negative output gap of about 3.2% of GDP by end-2021 - likely ruling out policy normalisation by the Monetary Authority of Singapore (MAS) this year.</strong>
</li>
<li><strong>Our base-case scenario is thus for MAS to only raise the S$NEER slope to 0.5% per annum from 0% currently in Apr-22. </strong></li>
<li>Our GDP growth forecast of 4-4.5% in 2022 implies the (closing) negative output gap falling below 1.0% of GDP by April and closing by end-2022, alongside firmer unit labour costs from the tapering of wage subsidies and higher domestic cost pressures as the pass-through of higher energy prices this year completes itself that we think will compel the central bank to normalise policy, given the larger weight it historically assigns to price variables.</li>
</ul>


We remain relatively sanguine over the external outlook in the near-term, despite the less vibrant trade print from February.
However, further improvement in the labour market will likely be slow as a full recovery in the virus-sensitive sectors e.g. tourism and aviation is pushed out to 2H22, and hiring sentiment in manufacturing possibly staying muted despite strong output due to the narrow pattern of growth that is led by the electronics-related sectors.
Assuming a long-run potential growth rate of 2%, with hysteresis or economic “scarring” effects partially but not fully offset by more robust fixed investment commitments and the slight bump up in labour productivity in 2020-21, our full-year GDP growth forecast of +6.6% in 2021 still implies a material negative output gap of about 3.2% of GDP by end-2021 - likely ruling out policy normalisation by the Monetary Authority of Singapore (MAS) this year.

Our base-case scenario is thus for MAS to only raise the S$NEER slope to 0.5% per annum from 0% currently in Apr-22. 
Our GDP growth forecast of 4-4.5% in 2022 implies the (closing) negative output gap falling below 1.0% of GDP by April and closing by end-2022, alongside firmer unit labour costs from the tapering of wage subsidies and higher domestic cost pressures as the pass-through of higher energy prices this year completes itself that we think will compel the central bank to normalise policy, given the larger weight it historically assigns to price variables.


Singapore: When Will MAS Normalise Policy?