Singapore 2023 GDP growth to ease to 0.5-2.5% on weaker external demand

SINGAPORE (ICIS)–Singapore’s economy is projected to grow by 0.5% to 2.5% in 2023, slowing down from the expected growth of around 3.5% this year, on the back of worsening external demand, official data showed on Wednesday.

“Significant uncertainties and downside risks in the global economy remain,” Singapore’s Ministry of Trade and Industry (MTI) said in a statement.

With many advanced economies raising interest rates to combat high inflation, the impact of tightening financial conditions on global growth could be larger than expected, it said.

Further escalations in the Russia-Ukraine war and geopolitical tensions among major global powers could also worsen supply disruptions, dampen consumer and business confidence, as well as weigh on global trade.

“GDP growth rates in most major economies are expected to moderate further from 2022 levels, with sharp slowdowns projected in the US and [the] eurozone,” said the ministry.

Against this backdrop, the growth of export sectors in Singapore is expected to weaken in tandem with the deterioration in external demand conditions, the MTI said.

“For instance, the semiconductors segment of the electronics cluster is expected to be negatively affected by the fall in global demand for semiconductors, while the machinery and systems segment of the precision engineering cluster is projected to be weighed down by a cutback in capital spending by semiconductor manufacturers amidst weak demand,” it added.

For the rest of 2022, the ministry said the weaker economic outlook would weigh on the growth of export sectors, including the chemical and electronic sectors.

The 2022 GDP growth forecast for Singapore has been narrowed to “around 3.5 %”, from “3.0 to 4.0%”, the MTI said.

In the third quarter of 2022, the Singapore economy expanded by 4.1% on a year-on-year basis, easing from the 4.5% growth in the previous quarter.

This was lower than the initial 4.4% year-on-year growth projection that the ministry made earlier this year.

On a quarter-on-quarter seasonally adjusted basis, the economy grew by 1.1%, a reversal of the 0.1% contraction in the second quarter.

Focus article by Nurluqman Suratman