With an uneven picture ahead, the Ministry of Trade and Industry has maintained its full-year 2023 GDP forecast at a growth 0.5 to 2.5%, with growth likely to come in at around the mid-point of the range.
On one hand, the global economic environment remains weak. However, there are certain Singapore economic sectors such as air transport and hospitality extending their post-pandemic rebound. In addition, the neighbouring Asean economies are seen to enjoy steady growth prospects too.
According to the latest official view on May 25, the performance of advanced economies such as the US and Eurozone has been more resilient than expected, supported by domestic services demand.
“Nonetheless, their growth outlook for the rest of the year remains weak,” says MTI.
China, another key market, is seeing stronger than earlier expected recovery, driven by a pickup in domestic services consumption with the end of pandemic-related curbs.
“However, continued stresses in its property market, as well as weakness in its industrial sector amidst subdued external demand conditions, will continue to weigh on its recovery,” says MTI.
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Meanwhile, within Singapore, the growth outlook for the aviation- and tourism-related sectors remains positive given the ongoing recovery in international air travel and inbound tourism.
These include the air transport, accommodation and arts, entertainment & recreation sectors, as well as the aerospace segment of the transport engineering cluster.
For the first quarter, Singapore’s GDP for the first quarter managed to scrap a growth of 0.4% y-o-y, moderating from 2.1% seen in 1Q2022.
See also: Singapore's headline inflation rebounds to 3.7% y-o-y; core inflation up to 3.3% y-o-y in December
However, on a q-o-q basis, the GDP contracted by 0.4%, reversing from 0.1% growth managed in 4Q2022.
The key manufacturing sector was down again, contracting 5.6% y-o-y, versus a contraction of 2.6% in the preceding quarter.
On the other hand, the construction sector was a bright spot, with its 7.2 % y-o-y expansion, albeit a slight moderation from the 10% growth recorded in the preceding quarter.
For the year ahead, the government maintains the usual cautious tone, citing how downside risks have risen with recent banking sector stresses abroad.
This has the effect of raising the risk of a sharper-than-expected tightening in global financial conditions, which could weigh on consumption and business investments and lead to a broader retraction in global growth beyond the manufacturing downturn.
Second, escalations in the war in Ukraine and geopolitical tensions among major global powers could lead to renewed supply disruptions, dampen consumer and business confidence, as well as weigh on global trade.
In its separate announcement, trade promotion agency Enterprise Singapore, citing the on-going manufacturing downcycle and lower oil prices, has downgraded its full year Nodx forecast to a lower range, of a contraction between 10 and 8%.
