A slowdown in GDP growth was experienced by Singapore in 2022, with an expansion of only 2.1% in the fourth quarter and 3.6% over the entire year, compared to the robust 8.9% GDP growth in 2021. But Maybank thinks that Singapore could avoid a recession in 2023, even though different sectors are expected to grow at different rates.
China’s reopening is expected to cushion the impact of the slowdown in the US and EU on Singapore’s economy, with Maybank reporting that the country is expected to have a “half-full” economy in 2023, rather than a “half-empty.” Maybank also believes that the reopening of China’s economy will reduce the odds of a recession and “decouple” Singapore’s overall economy from the manufacturing downturn.
The Ministry of Trade and Industry (MTI) has maintained its forecast of 0.5% to 2.5% growth for the economy in 2023, with Maybank also sticking to its growth forecast of 1.7%, slightly above the MTI’s figures.
Uneven growth is anticipated, with manufacturing and trade-related services expected to experience a recession. In contrast, construction and services are expected to continue expanding with the reopening and recovery of the hospitality, aviation, and consumer-facing sectors.
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UOB has projected growth of 0.7% for 2023, which is within the range of the MTI’s growth forecast. However, UOB has cautioned that the US and European economies could enter a “shallow recession,” which could impact Singapore’s manufacturing and external-oriented service sectors. The electronics industry and the official Purchasing Managers’ Index (PMI) for Singapore are also expected to stay weak for at least another quarter or two, according to a report from UOB.
Maybank thinks that the Monetary Authority of Singapore (MAS) will tighten monetary policy again in April 2023, most likely through another re-centering, to ease the high core inflation pressures caused by a tight labour market.
While Singapore’s growth may be slower in 2023, a recession can be avoided, according to Maybank. Uneven growth is predicted, with some sectors experiencing a recession and others continuing to expand. But the reopening of China’s economy and the MAS’s tightening of monetary policy should help soften the blow of any possible slowdowns in the economy.
