Singapore Trims Economic Growth Forecast Amid Sluggish External Demand
Singapore has revised its economic growth forecast for this year, citing weak global demand and a sluggish global economy. The Ministry of Trade and Industry announced that the growth forecast has been narrowed to a range of 0.5% and 1.5%, down from the earlier estimate of 0.5% to 2.5%.
The country’s gross domestic product (GDP) for the April to June quarter grew by 0.5% year-on-year, falling short of the government’s previous estimate of 0.7% announced in July. The Ministry of Trade and Industry stated that Singapore’s external demand outlook for the rest of the year remains weak.
On a quarter-on-quarter seasonally adjusted basis, the country’s economy recorded marginal growth of 0.1%, narrowly avoiding a technical recession. The decline in the exports-led manufacturing sector was a contributing factor to the slower growth, with a year-on-year contraction of 7.3% in the April to June period, worse than the 5.4% contraction in the previous quarter.
The ministry noted that the global electronics downturn is likely to be protracted, with a potential recovery only towards the end of the year at the earliest. Manufacturing output, particularly in the electronics and precision engineering clusters, is expected to be weighed down by the global electronics downturn.
The finance and insurance sector in Singapore is also expected to experience sluggish growth due to the continued weakness in the external economic situation and tight financial conditions.
The government highlighted downside risks in the global economy, including the possibility of more persistent inflation in advanced economies, which could result in tighter global financial conditions and reduced global spending. Additionally, escalations in the war in Ukraine and geopolitical tensions among major global powers could lead to renewed supply disruptions and dampen consumer and business confidence, as well as weigh on global trade.
Despite these challenges, Singapore remains committed to mitigating the impact of external factors on its economy. The government continues to implement measures to support businesses, encourage innovation, and promote productivity growth.
The trimmed economic growth forecast serves as a reminder of the ongoing vulnerabilities and uncertainties in the global economy, which Singapore, like many other countries, must navigate in order to sustain growth and stability.