Singapore’s economic growth slows as global headwinds mount
- Singapore’s economy grew by 3.8 per cent last year – more than expected but much slower than the 7.6 per cent rise enjoyed in 2021
- Elevated interest rates, declining household savings, high inflation and falling exports are all expected to hurt growth in the year ahead
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While the 3.8 per cent on-year expansion was welcome, it was weighed by a 3 per cent contraction in the key manufacturing sector in the final three months.
Growth in the fourth quarter came in at 2.2 per cent, sharply down from 4.2 per cent in July-September, according to advance estimates by the trade ministry.
Exports for computer chips and other products have been hit by softer global demand caused by surging inflation and sharp increases in interest rates.
The city state’s economic performance is often seen as a useful barometer of the global environment because of its reliance on trade with the rest of the world.
Last year’s growth beat the 3.5 per cent expected by the government but was half the 7.6 per cent rise enjoyed in 2021.
“While the slight outperformance suggests some resilience in economic activities for now, the overall trend remains on the downside,” Yeap Jun Rong, market analyst at online trading firm IG, said in a note.
Research house Capital Economics said it expects exports to fall further on expectations the global economy would enter a recession this year.
Singapore fends off recession as economy grows in third quarter
“Elevated interest rates, declining household savings and high inflation are likely to drag on domestic demand,” it added.
Song Seng Wun, a regional economist with CIMB Private Banking, said: “The Singapore economy, though it faced headwinds, did well enough. But the outlook is cautious given that we are such a trade-dependent economy.”
“The international outlook remains troubled. The Russia-Ukraine conflict continues, with no good outcome in sight,” he said.
“US-China tensions are likely to persist. How quickly China recovers from Covid-19 remains to be seen, while the US and EU may well enter recession. Our economy will be affected.”
