Singapore cuts 2022 growth forecast to reflect global impact

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Singapore cuts 2022 growth forecast to reflect global impact

After the economy fell into contraction in the second quarter, Singapore trimmed its growth forecast for 2022 to reflect an increasingly challenging global environment.

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The June quarter's gross domestic product fell by 0.2% from the previous three months, and worse than the zero growth estimated by the Ministry of Trade and Industry earlier in the day. It narrowed the full-year projection to a range of 3% -- 4% from 3% -- 5% previously seen.

The MTI flagged the risks to global recovery from aggressive monetary policy tightening and China's ongoing struggles with Covid 19 and a property market downturn.

Gabriel Lim, MTI's permanent secretary, said in a briefing after the publication that the global economy remains highly impacted.

Lim cited Russia's war in Ukraine as a chance of worsening inflation and global growth prospects, as well as financial instability caused by tighter monetary policies in advanced economies and possible further geopolitical tensions in Asia.

The Singapore dollar fell by 0.1% to 1.3704 per dollar at 8: 36 am local time.

A combination of monetary policy tightening and targeted subsidies to aid the most vulnerable households has helped stave off further damage to its post-Covid growth recovery, stemming particularly from supply-driven price shocks. Singaporean officials are bracing for more volatility in a global economy that is on the brink of a recession, according to the International Monetary Fund.

The bigger question is what is the outlook for 2023, said Selena Ling, head of Treasury Research Strategy at Oversea-Chinese Banking Corp. The trade ministry data showed that the economy grew by 4.4% in the second quarter from a year ago, compared to an earlier estimate of 4.8% expansion. MTI said the government expects to see a quarter-on-quarter growth for the rest of the year, ruling out a technical recession.

Monetary policy is still appropriate after the tightenings this year, according to Edward Robinson, deputy managing director for the Monetary Authority of Singapore.

He said that the pressures on the inflation outlook and the third quarter will be a critical time to watch. Robinson said that the closely watched core inflation print is expected to rise a bit this quarter.

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