Singapore said Monday it will stick to its economic growth forecast for 2023 despite the slowdown last year, encouraged by China’s rapid reopening after years of crushing zero-Covid policies.
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.
Singapore’s Ministry of Trade and Industry said in a statement that it would maintain its growth forecast of 0.5 to 2.5 percent.
“Growth in China is projected to pick up in tandem with the faster-than-expected easing of its Covid-19 restrictions,” the Ministry of Trade and Industry (MTI) said in a statement.
“This has led to improvements in the growth outlook of regional economies.”
It also pointed to the easing of global commodity prices, but cautioned that they “remain elevated with the ongoing Russia-Ukraine war”.
Singapore’s economy expanded 3.6 percent in 2022, slowing from the 8.9 percent growth in 2021, the MTI said.
Its government lifted the bulk of its Covid restrictions last year. On Monday, it also ended the requirement to wear face masks on public transport.
“The economy still remains resilient despite the slightly softer GDP side as the job market is doing strong,” said Song Seng Wun, a regional economist with CIMB Private Banking.
Despite the reopening of China — the world’s second-biggest economy — and other positive global trends, the MTI warned that uncertainties remain.
It pointed to the rate hike campaigns by central banks to rein in inflation, as well as the impact of property sector woes and weakening global demand on China’s recovery.
“Further escalations in the war in Ukraine and geopolitical tensions among major global powers could worsen supply disruptions, dampen consumer and business confidence, as well as weigh on global trade,” it added.
Chief Economist at OCBC Bank Selena Ling said: “China’s re-opening bodes well for regional growth momentum if Chinese consumer demand for goods and services picks up in coming months, however, this may not suffice to offset the slowing demand story in other major economies like the US, Eurozone and the UK.”