June 7, 2023
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Singapore’s economy expanded 3.8% in 2022 but faces new risks

SINGAPORE — Singapore’s economy grew sooner that official forecasts in 2022 but slower exercise in the fourth quarter factors to important risks forward for the city-state in the new 12 months as international demand weakens and inflationary pressures weigh.

Singapore’s economy grew 3.8% in 2022, preliminary knowledge from the Ministry of Commerce and Business confirmed on Tuesday, beating authorities forecast for progress of three.5% and down from 7.6% in 2021.

Gross home product (GDP) expanded 2.2% in October-December on a year-on-year foundation, the federal government knowledge confirmed, virtually half the 4.2% progress seen in the third quarter. Eight economists polled by Reuters had anticipated progress of two.1%.

“It is concerning that there is a slight quarter-on-quarter fall in services… this showed the impact of the global slowdown on external oriented services sectors, and that further growth from current levels will be harder to achieve in 2023,” mentioned MUFG analyst Jeff Ng.

GDP grew 0.2% on a quarter-on-quarter seasonally adjusted foundation in October-December.

Singapore Prime Minister Lee Hsien Loong mentioned in his New Yr message on Saturday that the worldwide outlook stays troubled, which can have an effect on the city-state’s economy. The federal government expects progress of between 0.5% to 2.5% this 12 months.

Singapore has seen some indicators of worth pressures easing in current months but inflation nonetheless remained elevated at about 5%.

In the meantime, the nation’s gross sales tax has been raised to eight% from 7% since Jan. 1 this 12 months as the federal government wants extra income to fund rising healthcare expenditure of its growing older inhabitants. The gross sales tax will likely be additional raised to 9% from 2024.

Singapore’s authorities has pledged to provide virtually 3 million Singaporeans no less than S$700 in money payouts over 5 years as a part of an S$8-billion “assurance package” to assist them address rising costs.

Capital Economics mentioned the economy is prone to battle, which suggests the Financial Authority of Singapore is unlikely to tighten financial coverage in 2023. The central financial institution tightened its international exchange-based financial coverage 4 instances final 12 months to combat rampant inflationary pressures.

“Looking ahead, we think growth is likely to weaken further. Exports are likely to fall further if, as we expect, the global economy enters a recession in 2023,” Capital Economics mentioned. “Elevated interest rates, declining household savings and high inflation are likely to drag on domestic demand.” — Reuters

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