The Ministry of Trade and Industry (MTI) is projecting Singapore’s gross domestic product (GDP) growth to come in at “around 3.5%” in 2022. This is at the mid-range of its previous projection of a 3.0% to 4.0% growth.
The revised projection comes as Singapore’s external demand outlook softened further since the Economic Survey of Singapore was conducted in August. This was attributable to the weaker outlook for the Eurozone and Chinese economies. The Eurozone economy is currently facing an energy crunch while China continues to deal with the recurring Covid-19 outbreaks and a downturn in its property market.
For the rest of 2022, MTI expects that the weaker economic outlook will weigh on the growth of outward-oriented sectors in Singapore. This will be mitigated by the strong recovery in air travel and the arrival of international visitors, as well as the lifting of travel restrictions in Singapore.
In 2023, GDP growth rates in most major economies are expected to moderate further from 2022 levels. In the US and Eurozone, sharp slowdowns are projected for 2023.
On this, including factoring in the likelihood of global supply disruptions continuing into 2023, Singapore’s GDP growth for 2023 is estimated to range between 0.5% to 2.5%, the ministry adds.
In the 3Q2022, Singapore’s economy expanded by 4.1% y-o-y, easing from the previous quarter’s 4.5% growth. On a q-o-q seasonally-adjusted basis, the economy grew by 1.1%, reversing the 0.1% contraction in the quarter before.
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The GDP growth during the 3Q2022 was thanks to expansions in most sectors.
This was especially seen in the “robust growth” of the food and beverage (F&B) services sector, which expanded by 30.5% y-o-y from a low base last year. The sector’s growth was mainly due to a pickup in sales volumes at food caterers, restaurants, and cafes, food courts & other eating places.
During the 3Q2022, the manufacturing sector expanded at a slower pace of 0.8% y-o-y compared to the 5.6% y-o-y growth in the 2Q2022. The growth was due to output expansions in the transport engineering, general manufacturing and precision engineering clusters, which outweighed output declines in the electronics, chemicals and biomedical manufacturing clusters.
The construction sector also expanded by 7.8% y-o-y, higher than the 4.8% growth seen in the 2Q2022 as both public and private sector construction output rose.
The wholesale trade sector rose by 5.4% y-o-y in the 3Q2022 due to expansions in the machinery, equipment & supplies, and fuels & chemicals segments.
The retail trade sector expanded by 8.9% y-o-y, driven by higher non-motor vehicle sales volume and despite the lower motor vehicle sales volume on the back of lower certificate of entitlement (COE) quotes.
The transportation & storage sector improved by 6.8% in the quarter thanks to strong growth in the air transport segment and expansions in both the land transport and water transport segments.
The accommodation sector was the only exception, contracting by 1.9% y-o-y. The contraction, however, was a moderation from the 3.4% contraction in the 2Q2022. According to MTI, the sector’s performance continued to be weighed down by the decline in government demand for quarantine and stay-home-notice dedicated facilities relative to a year ago.
The information & communications sector expanded by 6.2% y-o-y, led by the information technology (IT) and information services segment.
Growth in the finance & insurance sector slowed to 0.4% y-o-y from 2.4% y-o-y previously. This was mainly due to a contraction in the banking segment on the back of lower net fees & commissions income.
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The real estate sector grew by 11.7% y-o-y, which was largely supported by the private residential property segment as well as the commercial office and industrial space segments.
The professional services sector expanded by 8.3% y-o-y in the 3Q2022 mainly due to the architectural & engineering, technical testing & analysis, and other professional, scientific & technical services segments.
The administrative & support services sector saw its growth moderate to 7.9% y-o-y from the 8.5% growth in the 2Q2022. That said, the other administrative & support services segment expanded, thanks to a strong recovery in the activities of tour operators, travel agencies and MICE (or meetings, incentives, conferences and exhibitions) organisers.
The ‘other services industries’ expanded by 8.0% y-o-y with broad-based growth in the arts, entertainment & recreation, “others”, public administration & defence, and education, health & social services segments.
NODX growth projection
At the same time, Enterprise Singapore has adjusted its 2022 growth projection upwards for the country’s non-oil domestic exports (NODX) to “around +6.0%”.
Singapore’s total merchandise trade estimate was also revised upwards to “+19.5% to +20.0%”.
The growth projection for 2022 comes amid the “better-than-expected” performance to-date, driven by oil and electronics trade, notes Enterprise Singapore in its trade performance review for the 3Q2022 on Nov 23.
Oil and electronics trade had accounted for 40% and 25% of Singapore’s total merchandise trade growth in the first three quarters of 2022 respectively. However, the support may ease amid a weaker global economic outlook, Enterprise Singapore warned.
Since the last update, Singapore’s total merchandise trade continued to grow more than 20% y-o-y in the 3Q2022. The growth was supported by oil trade on the back of higher oil prices y-o-y, even though the higher prices had been erased after the 1H2022.
At the same time, electronics trade continued to account for a “sizeable quarter” of non-oil trade growth in 3Q2022 though it had eased from its 45% contribution in the previous quarter on amid a weakened global semiconductor outlook.
Looking ahead, higher oil prices y-o-y should provide some support to growth in oil trade and total trade in nominal terms, notes Enterprise Singapore. According to the US Energy Information Administration (EIA), oil prices were projected to average at US$93 ($128.37) per barrel in the 4Q2022, 17% higher y-o-y.
That said, such support could be limited going into 2023, with lower oil prices projected during the year.
The easing electronics trade and exports performance could also weigh on total trade and NODX growth for the rest of 2022 and 2023, says Enterprise Singapore.
According to the International Monetary Fund (IMF), global economic activity was expected to grow by 3.2% in 2022 before slowing to 2.7% in 2023. Most of Singapore’s key trade partners including China and the US were expected to grow in 2022 as well. However, the downside risks such as high inflation and other factors including the spillover effects from the Russia-Ukraine conflict may still weigh on the global economy.
Similarly, the World Trade Organisation (WTO) is expecting global merchandise trade to grow by 3.5% in 2022, up from its previous estimate of 3.0%. This may slow down to a global growth of 1.0% for 2023, down from its previous estimate of 3.4% due to headwinds in the global economy such as the conflict, high energy prices and inflation.
For 2023, Enterprise Singapore’s growth projections are at “-2.0% to 0.0%” for both NODX and total merchandise trade.
NODX 3Q
Singapore’s non-oil domestic exports (NODX) rose by 7.2% in the 3Q2022, slightly lower than the 8.9% growth seen in the 2Q2022.
This quarter’s growth was thanks to non-electronics, which rose for the seventh consecutive quarter on a y-o-y basis. At the same time, electronics declined during the quarter after seeing nine straight quarters of growth.
On a y-o-y basis, domestic exports of non-electronic products rose by 10.0% in 3Q2022, with pharmaceuticals (+28.7%) and structures of ships & boats and food preparations (+30.1%) being the largest contributors to the growth.
NODX for electronics declined in the 3Q2022 by 1.8% after the 9.7% rise in the previous quarter. During the 3Q2022, the decline was led by disk media products, parts of personal computers (PCs) and capacitors, which contracted by 24.3%, 19.7% and 42.2% respectively.
Singapore’s NODX to the top 10 markets as a whole grew in the 3Q2022, though exports to China and Hong Kong declined. The biggest contributors to the NODX growth were the US (+26.4%), the EU 27 (+26.5%) and Indonesia (+24.9%).
On a q-o-q seasonally-adjusted basis, NODX rose by 0.4% in the 3Q2022, reversing from the 3.0% decline in the 2Q2022.
Total trade
On a y-o-y basis, non-oil re-exports (NORX) expanded by 19.8% in the 3Q2022 due to the higher shipments of both electronic and non-electronic re-exports.
Electronic NORX grew by 10.5% due to higher re-exports of ICs (+11.5%), diodes & transistors (+27.2%) and telecommunications equipment (+17.6%). At the same time, non-electronic NORX expanded by 32.2% in 3Q2022. This was due to higher re-exports of non-monetary gold (+186.8%), non-electric engines & motors (+53.9%) and specialised machinery (+60.1%).
On a q-o-q seasonally adjusted basis, NORX fell by 0.5%.
Singapore’s total merchandise trade rose by 25.7% y-o-y in 3Q2022 as both oil and non-oil trade grew.
Oil trade expanded by 65.8% while non-oil trade grew by 18.0% in 3Q2022.
