Singapore faces slower growth in 2023, but seen to avoid contraction

SINGAPORE—Singapore is expected to post slower economic growth this year but it “should avoid an outright contraction”, Prime Minister Lee Hsien Loong said Sunday.

The Southeast Asian city-state’s economic performance is often seen as a barometer of the global environment because of its reliance on trade with the rest of the world.

The financial center also has one of the busiest ports in the world which serves as a key link between Asia and the rest of the world. In his annual May Day message, Lee said there is hope inflation will let up in the second half of the year and that retrenchment numbers “remain manageable.”

“But our external environment remains volatile, fraught with serious geopolitical tensions,” Lee warned, pointing to the risk of recession in the West, where interest rates continue to be hiked to tame inflation. “The multilateral trading system is being progressively undermined by growing nationalist and protectionist sentiments, affecting international trade and cooperation.” Singapore’s economy expanded 3.6 percent in 2022, slowing from the 8.9 percent growth in 2021.

The Monetary Authority of Singapore has said the financial hub’s GDP is expected to grow between 0.5 percent and 2.5 percent this year. The city-state will have to adapt to the economic disruption of emerging industries and technologies, Lee added.

“Singapore’s survival depends on us staying open and doing business with the world,” he said. “This means continually transforming our industries, enhancing existing capabilities and building new ones as we move into growth markets.”