Singapore economy beats estimates as government warns of risks

Southeast Asian city-state warns of rise in ‘downside risks’ amid rising interest rates, escalation of war in Ukraine.

Singapore's economy grew 0.4 percent in the first quarter of 2023 [File: Wallace Woon/EPA-EFE]

Singapore’s economy expanded by 0.4 percent in the first quarter amid government warnings of a gloomy outlook for the global economy.

The Southeast Asian city-state’s economic performance for the January-March period was better than expected but fell short of the 2.1 percent growth recorded in the previous quarter.

The Ministry of Trade and Industry (MTI) on Thursday warned of a rise in “downside risks”, including rising interest rates and escalations in the war in Ukraine, but maintained its growth forecast for 2023 at between 0.5 and 2.5 percent.

The ministry said this year’s growth would likely fall in the middle of its forecast range.

Singapore’s economy, a major financial hub that is heavily dependent on trade, is often seen as a barometer of the global economy because of its exposure to international conditions.

Gabriel Lim, the trade ministry permanent secretary, said the demand outlook for 2023 had deteriorated.

“Singapore’s external demand outlook for the rest of the year has weakened,” Lim told a news conference.

“Apart from the expected slowdown in the advanced economies, the electronics downcycle is likely to be deeper and more prolonged than earlier projected.”

Singapore’s economy grew 3.8 percent in 2022, down from 7.6 percent the year before, as the lifting of COVID-19 restrictions and border controls helped buoy economic activity.

Source: Al Jazeera and news agencies