Singapore’s PM Lee warns of uncertainties in 2023 as risks mount

As the world leaves the worst of inflation behind in 2022, Singapore’s Prime Minister Lee Hsien Loong warned of more pain in the new year from slowing economic growth.

“We must brace ourselves for the uncertainties ahead,” Lee said Saturday in his New Year’s Eve message to Singaporeans, referring to a troubled international outlook. “Our economy will be affected,” he said.

Trade-reliant Singapore expects to grow 3.5 per cent in 2022, and Lee sees the pace decelerating to between 0.5 per cent and 2.5 per cent next year as many economies head toward a recession. The government forecasts exports, which are more than one-and-a-half times the island’s gross domestic product, to decline 2 per cent in 2023 in the worst-case scenario and post zero growth in the best case.

While China’s reopening may support commerce in Singapore, any gains may be offset by a decline in demand from other markets. China is the city state’s top goods trading partner, while the US the third-biggest as of 2021.

This Year in Singapore: post-Covid life, a PM-in-waiting, gay sex ban ends

He flagged the Russia-Ukraine conflict, and US-China tensions as adding to the risks. “How quickly China recovers from Covid-19 remains to be seen, while the US and EU may well enter recession,” he said, referring to the European Union also staring at a downturn amid tight monetary conditions to fight price pressures.

The Monetary Authority of Singapore, which tightened policy five times since October 2021 to tame inflation, may leave its exchange-rate settings unchanged at its next scheduled meeting in April to support the economy, according to Bloomberg Economics.

The government, for its part, has unveiled a few rounds of inflation-relief measures through 2022 to blunt the increase in cost of living on lower- and middle-income households.

“Even the darkest of clouds have silver linings, but only for those bold enough to seize opportunities,” Lee said.