SINGAPORE — Singapore has maintained its full-year economic forecast for 2022 at 3 per cent to 5 per cent but is expecting growth to come in “at the lower half” of this forecast range amid a weaker external environment.

Official data released by the Ministry of Trade and Industry (MTI) on Wednesday (May 25) showed the Singapore economy grew by a slower pace in the first three months of the year.

Gross domestic product (GDP) expanded by 3.7 per cent on a year-on-year basis in the first quarter, better than the 3.4 per cent seen in the Government’s advance estimate but much slower than the 6.1 per cent growth in the previous quarter.

On a quarter-on-quarter seasonally adjusted basis, the economy grew 0.7 per cent, also higher than the 0.4 per cent in the initial estimates but pulling back from the 2.3 per cent growth in the preceding quarter.

Growth during the first quarter was mainly supported by the manufacturing, finance and insurance, and professional services sectors.

WEAK EXTERNAL ENVIRONMENT

In its latest quarterly economic report, MTI said the external economic environment has deteriorated since February, partly due to the onset of the Ukraine war which has disrupted the global supply of energy, food and other commodities.

This has in turn exacerbated global inflationary pressures and adversely affected the growth of many economies.

Over in China, stringent Covid-19 measures are also likely to weigh on the country’s economy and contribute to global supply bottlenecks.

“Consequently, global supply disruptions are projected to be more severe and prolonged than earlier expected, potentially persisting throughout 2022. This, in turn, is likely to constrain production and dampen GDP growth in some external economies by more than previously projected,” MTI said.

At the same time, there remains “significant” downside risks in the global economy. Apart from the ongoing Ukraine war, others include a faster-than-expected monetary policy tightening in advanced economies and how the Covid‐19 pandemic could develop.

With that, the growth outlook for some outward-oriented sectors in Singapore has weakened.

For example, as China is a key market for petroleum and chemicals products from Singapore, its economic slowdown is likely to adversely affect the growth prospects of the local chemicals cluster and the fuel and chemicals segment of the wholesale trade sector.

Growth in the water transport segment is also expected to be weighed down by prolonged supply disruptions and port congestions worldwide. 

Still, there are sectors in the Singapore economy which are seeing their outlook picking up, such as the electronics cluster that remains supported by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres.

MTI said that taking into account the first-quarter economic performance of the Singapore economy alongside latest global and domestic economic developments, it “continues to expect the Singapore economy to grow by 3 to 5 per cent in 2022, although growth is now more likely to come in at the lower half of the forecast range”. CNA