Singapore reaffirmed its growth forecast for 2023 after a slower-than-expected performance last year, amid cautious optimism from China’s reopening and lingering risks from slowing demand globally.
(Bloomberg) — Singapore reaffirmed its growth forecast for 2023 after a slower-than-expected performance last year, amid cautious optimism from China’s reopening and lingering risks from slowing demand globally.
Gross domestic product is projected to expand 0.5% to 2.5% this year, the Ministry of Trade and Industry reported Monday, maintaining its estimate provided by Prime Minister Lee Hsien Loong on Dec. 31. The government reported 2022 growth at 3.6%, compared with 3.8% previously seen.
The government’s final reading for the quarter through December showed the economy grew 2.1% from the same period in 2021, compared with the advance reading of 2.2% and the Bloomberg survey median of 2.3%. From the previous three months, the expansion was a modest 0.1% and slower than the 0.2% seen earlier.
Separate data from Enterprise Singapore on Monday showed overall trade grew 17.7% last year, following a 19.7% increase in 2021. It maintained the 2023 forecast for both total merchandise trade and non-oil domestic exports to either remain flat or contract as much as 2%.
While the MTI said China’s reopening bodes well for the growth outlook for regional economies, it cautioned that uncertainties in the global economy remain.
That view marks a departure from the International Monetary Fund, which last month raised its growth outlook for the first time in a year to 2.9% in 2023. Singapore, where officials have been focused on curbing core price growth that lingers close to a 14-year high while managing a slowdown this year, sees higher borrowing costs crimping demand even as China’s economic reopening is expected to provide some impetus especially through trade and tourism channels.
The cumulative effects of tightening is helping slow the inflation momentum, Edward Robinson, deputy managing director of the Monetary Authority of Singapore, said in a briefing. The MAS, which uses the exchange rate as its main policy tool, has tightened policy five times since October 2021 to tame inflation that’s currently hovering at 6.5% level.
“Let me affirm that the current monetary policy stance is appropriate,” said Robinson.
The growth-inflation balance will also be in the spotlight on Tuesday, when the government reports the budget for the coming fiscal year. Officials have been steering the public toward a post-Covid reality — having last week announced scrapping a mask mandate for public transportation — and this week may signal a return to fiscal conservatism after years of pandemic-era stimulus.
At the same time, the government will probably reinforce Tuesday longer-term investment priorities including digitalization, green energy transition, and health services for an ageing society.
Other details from Monday’s release include:
- On a full-year basis, manufacturing grew 2.5% in 2022, after 13.3% the prior year
- Construction grew 6.7%, after a jump of 20.5% in 2021
- Services producing industries grew 4.8% in 2022 compared with a 7.6% rise a year ago
–With assistance from Tomoko Sato, Aradhana Aravindan and Kevin Varley.
(Updates with chart after the third paragraph, MTI’s comment in the fifth, and MAS official’s comment in the seventh.)
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