Singapore sees growth dip amid global headwinds
SINGAPORE: Singapore expects economic growth to decelerate sharply next year amid a global slowdown, even as the city-state rules out a recession.
Gross domestic product (GDP) growth will probably slow to between 0.5% and 2.5% in 2023, according to estimates released by the Trade and Industry Ministry (MTI) yesterday.
A recession is not the baseline scenario, although there are downside risks, an MTI official said at a briefing.
The reading comes after a revision to the economy’s third-quarter performance, in which GDP increased 1.1% from the previous quarter, which was lower than the MTI’S initial reading of 1.5% and the median in a Bloomberg survey of economists.
The trade-reliant city-state sees a hit to global demand from tighter monetary policies to contain soaring inflation as well as weaker consumption growth because of China’s zero-covid policy.
Singapore also flagged risks to financial stability due to rising interest rates and capital flows that have implications for regional economies.
The Monetary Authority of Singapore was among the earliest to start tightening policy last year and delivered its fifth move in October as consumer price gains hovered at a 14-year high.
“Singapore’s economy will face a slew of headwinds next year, substantial reopening by China is likely needed to push growth to the upper end of the government’s forecast,” said Tamara Henderson, Asean economist at Bloomberg Economics.
On a year-on-year basis, the economy expanded 4.1% in the three months through September, slower than the 4.4% reading in the advance estimate and the 4.3% median growth predicted in the survey. That nudged the government to narrow its 2022 growth forecast to 3.5% from a range of 3% to 4% seen previously.
Singapore benefitted from pent-up demand as the economy reopened from the pandemic, and while growth prospects still remain strong for several sectors, such as travel and tourism, weak external demand conditions risk outweighing the positives.