Singapore’s economy grew more than expected last year, but much slower than in 2021, official data showed Tuesday, as analysts warned of weaker growth ahead owing to an expected recession in key markets.
While the 3.8 percent on-year expansion was welcome, it was weighed by a 3.0 percent contraction in the key manufacturing sector in the final three months.
Growth in the fourth quarter came in at 2.2 percent, sharply down from 4.2 percent in July-September, according to advance estimates by the trade ministry.
Exports for computer chips and other products have been hit by softer global demand caused by surging inflation and sharp increases in interest rates.
The city-state’s economic performance is often seen as a useful barometer of the global environment because of its reliance on trade with the rest of the world.
Last year’s growth beat the 3.5 percent expected by the government but was half the 7.6 percent rise enjoyed in 2021.
“While the slight outperformance suggests some resilience in economic activities, for now, the overall trend remains on the downside,” Yeap Jun Rong, market analyst at online trading firm IG, said in a note.
Research house Capital Economics said it expects exports to fall further on expectations the global economy would enter a recession this year.
“Elevated interest rates, declining household savings, and high inflation are likely to drag on domestic demand,” it added.
Song Seng Wun, a regional economist with CIMB Private Banking, told AFP: “The Singapore economy, though faced headwinds, did well enough. But the outlook is cautious given that we are such a trade-dependent economy.”
Prime Minister Lee Hsien Loong warned in his New Year’s message that growth this year is expected to ease to 0.5-2.5 percent.
“The international outlook remains troubled. The Russia-Ukraine conflict continues, with no good outcome in sight,” he said.
“US-China tensions are likely to persist. How quickly China recovers from Covid-19 remains to be seen, while the US and EU may well enter a recession. Our economy will be affected.”