SINGAPORE – Singapore’s economy will grow less this year than expected and could grow at a much slower pace in 2023, according to a report by the Asean+3 Macroeconomic Research Office (Amro).
The Republic’s gross domestic product (GDP) will grow 3.9% in 2022 after growing 7.6% a year earlier, Amro said in a July update to its regional economic outlook released Tuesday, July 5. . Growth in 2023 is expected to reach 2.4%, according to the report.
In its April update, the regional research organization forecast Singapore’s economy to grow 4% this year and 2.6% in 2023.
Amro blamed the war in Ukraine, China’s fight against Covid-19 and tighter global financial conditions for Singapore’s reduced growth prospects.
The same reasons led the organization to also reduce its growth estimate for the region.
Amro said the region – which includes the 10-member ASEAN group plus China, Japan and South Korea – will see growth of 4.3% this year, down from its previous forecast of 4.7%.
Dr. Khor Hoe Ee, Chief Economist at Amro, said: “As the Asean+3 region begins to emerge from the Covid-19 health crisis, the protracted war in Ukraine and persistent inflation in the United States ushered in a new set of challenges for policy makers. »
“In this formidable environment, ASEAN+3 policymakers now face difficult political trade-offs as they balance the need to maintain growth momentum while containing inflationary pressure,” Dr Khor added.
Amro raised its 2022 inflation forecast for the region to 5.2%, up 1.7 percentage points from April. Growth is expected to strengthen to 4.9% in 2023, while inflation is expected to moderate to 2.8%, he said.
The report says the war in Ukraine and sanctions against Russia are likely to linger and continue to exacerbate global supply chain issues that have driven up global fuel and food prices, leading to an acceleration of the inflation in ASEAN + 3.
In the United States, soaring prices prompted the Federal Reserve to raise interest rates at a faster pace than expected, raising fears of an impending recession.
Financial markets sold off and risk aversion soared, leading to capital outflows from emerging markets.
Recent shutdowns in China have added pressure on supply chains by restricting port activity and limiting the production of intermediate goods. According to the latest trade data, exports from the region have slowed down in both value and volume.
Amro said risks to the region’s growth outlook, where most economies are net importers of oil and gas, have increased since its last assessment in April.
“The likelihood of a quick resolution to the war in Ukraine has all but evaporated over the past three months.
“This will amplify existing risks to the region’s outlook as commodity prices remain high and supply chains continue to experience disruptions,” he said.