As the world leaves the worst of inflation behind, Singaporean Prime Minister Lee Hsien Loong (李顯龍) warned of more pain in the new year from slowing economic growth.
“We must brace ourselves for the uncertainties ahead,” Lee said on Saturday in his New Year’s Eve message to Singaporeans, referring to a troubled international outlook. “Our economy will be affected.”
Trade-reliant Singapore expects to grow 3.5 percent last year, and Lee sees the pace decelerating 0.5 percent to 2.5 percent this year as many economies head toward a recession.
Photo: Bloomberg
Singapore’s government predicts that exports, which are more than one-and-a-half times the island’s GDP, to decline 2 percent this year in the worst-case scenario and to post zero growth in the best case.
Although China’s reopening could support commerce in Singapore, any gains might be offset by a decline in demand from other markets.
China is the city-state’s top goods trading partner, while the US is the third-biggest as of 2021.
Lee flagged the Russian invasion of Ukraine and US-China tensions as adding to the risks.
Singapore would take a cautious approach in increasing airline seat capacity as travel from China is restored, while holding back from joining others that have imposed tighter travel restrictions on visitors from the country, the Singaporean Ministry of Health said on Friday.
“How quickly China recovers from COVID-19 remains to be seen, while the US and the EU may well enter recession,” Lee said on Saturday, referring to the EU also staring at a downturn amid tight monetary conditions to fight price pressures.
The Monetary Authority of Singapore, which tightened policy five times since October 2021 to tame inflation, could leave its exchange rate settings unchanged at its next scheduled meeting in April to support the economy, Bloomberg Economics said.
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