October 3, 2022
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Singapore downgrades Q2 GDP, outlook as risks grow

Singapore downgrades Q2 GDP, outlook as risks grow

SINGAPORE — Singapore’s financial system expanded lower than initially estimated within the second quarter (Q2) and the federal government revised its progress projections for 2022 decrease, flagging risks to the worldwide outlook from the Ukraine conflict and inflation.

Gross home product (GDP) grew 4.4% year-on-year within the second quarter, the Ministry of Commerce and Business (MTI) mentioned, slower than the 4.8% progress seen within the authorities’s advance estimate.

“Downside risks in the global economy remain significant…further escalations in the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices,” mentioned Gabriel Lim, everlasting secretary of MTI at a media briefing.

The weaker progress was partly because of the slowdown in electronics manufacturing, in keeping with MTI. The ministry mentioned weak point in China’s financial outlook, a key marketplace for petroleum and chemical substances merchandise, had additionally adversely affected Singapore’s progress prospects.

The Southeast Asian monetary hub is commonly seen as a bellwether for world progress as worldwide commerce dwarfs its home financial system.

On a quarter-on-quarter seasonally adjusted foundation, the financial system contracted 0.2%, in contrast with the federal government’s superior 0% estimate and the 0.8% progress within the first quarter.

“Our current baseline is that GDP will return to a slight positive (quarter-on-quarter) growth in the third and fourth quarter of this year,” mentioned Yong Yik Wei, chief economist of MTI on the media briefing “So in other words we do not expect technical recession.”

Singapore defines two consecutive quarters of quarter-on-quarter financial contraction as technical recession.

The MTI mentioned it could slender its 2022 GDP progress forecast vary to three% to 4% from 3% to five%, including the exterior demand outlook for the financial system has weakened in contrast with three months in the past.

Singapore’s inflation has reached a a couple of decade-high in latest months and its central financial institution tightened financial coverage in July in an off-cycle transfer to convey down value pressures.

The central financial institution’s subsequent coverage assertion is scheduled for launch in October, in keeping with the Financial Authority of Singapore (MAS).

“Our baseline is for the MAS to further tighten in October,” mentioned Selena Ling, head of treasury analysis and technique at OCBC.

“We are still seeing consistent and elevated inflationary pressure, both on the headline and the core side. And until we see signs, which is tight labor markets cooling off, that would still drive cost pressures in the Singapore economy,” she mentioned.

“The defensive move for MAS is to tighten in October. It is more to keep pace with the global tightening and also because we haven’t seen that cooling off in terms of our inflationary pressures yet,” she added.

Singapore Prime Minister Lee Hsien Loong this week warned “low inflation levels and interest rates that we have enjoyed in recent decades” had been unlikely to return anytime quickly.

He added the nation of 5.5 million should plan far forward and remodel trade, improve expertise and lift productiveness. — Reuters

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