Singapore has changed its 2022 GDP growth forecast to a narrower and lower range from 3–5% to 3-4%, given how the global economic environment has deteriorated since the last assessment.
For the 2Q, Singapore’s GDP was up 4.4% y-o-y, a slight pick up from the 3.8% y-o-y growth seen in 1Q. However, q-o-q, the second quarter was down 0.2% over the first, a reversal from the 0.8 per cent expansion in the first quarter.
The current consensus forecast of private sector economists, according to Bloomberg, is for a 3.8% growth this year.
“The external demand outlook for the Singapore economy has weakened compared to three months ago. At the same time, downside risks in the global economy remain significant,” says the Ministry of Trade and Industry on Aug 11.
“Notwithstanding recent signs of a slight easing in global supply disruptions, the disruptions are likely to persist for the rest of the year as underlying factors such as the Russia-Ukraine conflict and China’s zero-COVID policy remain,” says MTI.
MTI warns that further escalations in the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices.
More persistent and higher-than-expected inflation would dampen global growth further, including through even more aggressive monetary policy tightening in many advanced economies.
Second, financial stability risks could intensify if there are disorderly market adjustments to monetary policy tightening in the advanced economies.
In particular, the onset of large capital outflows from regional economies with high dollar-denominated debt levels could lead to tighter financial conditions and affect growth in these economies.
See also: Headline inflation eases to 1.4% on y-o-y basis in October; core inflation declines to 2.1%
Third, there is a risk that geopolitical tensions in the region could escalate and lead to further disruptions in supply chains.
Fourth, the trajectory of the COVID‐19 pandemic remains a risk, given the potential emergence of more virulent strains of the virus.
Practically all sectors registered growth in 2Q, although the range varies widely.
The key manufacturing sector was up 5.7% y-o-y, extending a 5.5% growth in 1Q.
The retail sector, meanwhile, was up 11.5% y-o-y, accelerating from a growth of 4.7%. The F&B sector jumped even more, up 28%.
