Singapore cuts GDP forecast as economy contracts in second quarter amid global volatility

The trade ministry trimmed the full-year GDP projection to a range of 3-4 per cent

It ruled out a technical recession but warned aggressive monetary policy tightening and further escalation in the Ukraine war would worsen inflation

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Singapore’s economy grew 4.4 per cent in the second quarter from a year ago. Photo: AFP

Published: 10:14am, 11 Aug 2022Updated: 12:22pm, 11 Aug 2022

Singapore trimmed its 2022 growth forecast to reflect an increasingly challenging global environment, after the economy slipped into contraction in the second quarter.

Final data for the June quarter on Thursday showed gross domestic product shrank 0.2 per cent from the previous three months, and worse than the zero growth estimated by Ministry of Trade and Industry earlier. It also narrowed the full-year projection to a range of 3 per cent-4 per cent from 3 per cent-5 per cent seen before.

The MTI flagged risks to global recovery from aggressive monetary policy tightening as well as China’s ongoing struggles with Covid-19 and a property market downturn.

“Downside risks in the global economy remain significant,” Gabriel Lim, MTI’s permanent secretary, said in a briefing after the release.

Lim cited potential further escalation in Russia’s war in Ukraine, which would worsen inflation and global growth prospects, as well as financial instability caused by tighter monetary policies in advanced economies and possible further geopolitical tensions in Asia.

The trade-reliant city state has sought to stave off further damage to its post-Covid growth recovery, stemming especially from supply-driven price shocks, through a combination of monetary policy tightening and targeted subsidies to aid the most vulnerable households.