Singapore cuts 2022 growth forecast on supply chain disruptions

Singapore cuts 2022 growth forecast on supply chain disruptions

Singapore has trimmed its growth forecast for 2022, as the global economic environment weakens further due to challenges such as inflation and persistent supply chain disruptions.

The Ministry of Trade and Industry MTI said on Thursday that the country's gross domestic product GDP is expected to come in between 3 and 4 per cent of the country s gross domestic product for this year, which is expected to come in between 3 and 4 per cent, a decrease from the previous 3 to 5 per cent range.

In May, policymakers had warned that growth would likely come in the lower half of the 3 to 5 per cent forecast range for this year.

MTI said the global economic environment has deteriorated further since its last assessment in May.

Growth in major advanced economies, such as the United States and the Eurozone, is going to be affected by stronger than expected inflation pressures and aggressive monetary policy tightening by central banks.

China continues to grapple with a deepening property market downturn and recurring domestic COVID 19 outbreaks, and supply chain disruptions are likely to continue for the rest of the year because of factors such as the Russia-Ukraine conflict and China's zero-COVID policy.

The Singapore economy's external demand outlook has weakened compared to three months ago, MTI said in its report.

There are a number of downside risks in the global economy that are significant, including the possibility of more escalations in the Ukraine war, disorderly market adjustments to monetary policy tightening in advanced economies, and the trajectory of the COVID 19 epidemic.

The outlook for some outward-oriented sectors in Singapore has dimmed, said MTI.

The growth prospects of Singapore's chemicals cluster and the fuels and chemicals segment of the wholesale trade sector have been negatively impacted by the weaker outlook in China, which is a key market for petroleum and chemicals products from Singapore.

Growth in the water transport and finance and insurance sectors is expected to be slowed due to the projected slowdown in major external economies.

Singapore has moved to living with COVID 19 with the removal of nearly all domestic and border restrictions. The recovery of some sectors of the economy, such as aviation and tourism, has been supported by this.