The Singapore economy expanded by 3.8% in 2022, surpassing official projections but still falling short of 2021’s GDP.
Following lifted Covid-19 restrictions in 2022, the Singapore economy grew by 3.8%, passing the official government forecast of “around 3.5%.” However, in contrast with 2021’s 7.6% rate, the region is slow to catch up with pre-pandemic figures. This 2021 figure was a rebound from its 2020 pandemic-induced 4.1% shrink.
As Singapore was one of the first countries in Asia to open its borders post-Covid, its aviation and tourism sectors benefited from this lift, contributing to the region’s growth but further pushing inflation rates.
Inflation is projected to be a continued risk factor in the new year, as analysts expect it is likely to remain elevated. The region’s core consumer inflation, excluding private transportation and living costs, increased by 5.1% in November but has remained unchanged since October, its first plateau since February 2022.
The economy’s performance in Q4 of 2022 was already a slowed 2.2% growth rate, compared to a reported 4.2% from July to September earlier that year.
All industries across the region experienced year-on-year growth in Q4 2022 with the exception of Singapore’s manufacturing sector, which shrunk by 3% compared to 1.4% expansion in the third quarter of the year. Production in the electronics, chemicals, and biomedical sectors dropped in 2022, according to Singapore’s Ministry of Trade & Industry.
“The key electronics industry has exhibited worrying signs in recent months. Exports to China, the city-state’s top export partner, have been contracting in both yearly and monthly terms,” said Denise Cheok, an economist at Moody’s Analytics.
The construction industry grew by 10.4% from October to December 2022, rising above its 7.8% growth in the previous quarter. Singapore’s services sector grew 4.1% in contrast with a 5.8% rise from July to September 2022.
Singapore’s government has forecast that economic growth will continue to be slow in 2023, projecting a 0.5% to 2.5% increase. The city-state’s non-oil exports dropped by 14.6% in November 2022 followed by a further 6.1% contraction in October, the second monthly contraction experienced following almost two years of growth.
As export demand continues to drop, especially for electronics, and there is even concern for a potential recession.
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