Singapore downgrades GDP outlook, avoids recession
Singapore downgrades GDP outlook, avoids recession Reuters
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Singapore Downgrades GDP Outlook, Avoids Recession
Summary
- Q2 GDP +0.1% q/q vs -0.4% in Q1
- MTI narrows 2023 GDP forecast to 0.5%-1.5% vs 0.5%-2.5%
- Analysts see no change to monetary policy at MAS Oct review
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SINGAPORE, Aug 11 (Reuters) – Singapore slightly cut its economic outlook for 2023 on Friday after it narrowly averted a recession in the second quarter, with weak global demand a key drag on its trade-reliant economy.
Gross domestic product (GDP) expanded a seasonally-adjusted 0.1% quarter-on-quarter in April to June, slower than 0.3% growth seen in the government’s advance estimate. The first quarter contracted 0.4%.
Industrial output and exports have fallen for nine straight months, raising the risk of a prolonged downturn, but a trade ministry official told a press conference a technical recession – two consecutive quarters of contraction – was not expected this year.
On an annual basis, the economy expanded 0.5%, compared with the advance estimate of 0.7% and first quarter growth of 0.4%, the Ministry of Trade and Industry (MTI) said in a statement.
Manufacturing will remain weak, dampened by a protracted downturn in electronics, while finance and insurance sectors will likely be subdued, MTI said.
On the bright side, consumer-driven and tourism sectors stand to benefit from the region’s post-pandemic recovery.
The ministry narrowed its GDP growth forecast to 0.5% to 1.5% this year from 0.5% to 2.5% previously. The economy grew 3.6% in 2022.
While the slowdown in manufacturing is proving to be “a little bit more protracted” than what the government initially thought, Singapore is expecting a modest recovery in the second half of the year, anchored by inbound tourism and resilience of consumer-facing sectors providing some cushion to growth, Yong Yik Wei, chief economist at MTI, said.
The Straits Times stock index (.STI) was down 0.6% in morning trade, lagging other markets in Asia.
Policy Stance Appropriate
Inflation had remained elevated in the first half of this year and some easing was seen in June’s figures, in line with the authorities’ expectations that core prices should moderate further in the second half.
Growth and inflation trends were within expectations, a central bank official at the same event said on Friday, adding the Monetary Authority of Singapore’s (MAS) policy stance was “appropriate”.
Analysts are expecting no change to monetary policy at MAS’s October meeting, despite cooling momentum.
“MAS will be reluctant to ease policy as price levels are still high, and also considering that another round of goods and services tax (GST) hike will be implemented next year,” said Barclays economist Brian Tan.
MAS left its policy settings unchanged in April, after tightening five times in a row since October 2021, reflecting concerns over the city-state’s growth outlook.
Reporting by Chen Lin; Additional reporting by Tom Westbrook; Editing by Kanupriya Kapoor and Jacqueline Wong
Our Standards: The Thomson Reuters Trust Principles.
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 12: Responsible Consumption and Production
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries.
- SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries.
- SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- GDP growth rate (Q2 GDP +0.1% q/q vs -0.4% in Q1)
- Industrial output and exports (falling for nine straight months)
- Manufacturing sector performance (weak due to a protracted downturn in electronics)
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries. | GDP growth rate (Q2 GDP +0.1% q/q vs -0.4% in Q1) |
| SDG 9: Industry, Innovation, and Infrastructure | SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries. | Industrial output and exports (falling for nine straight months) |
| SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries. | Manufacturing sector performance (weak due to a protracted downturn in electronics) | |
| SDG 12: Responsible Consumption and Production | SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. | Not mentioned in the article |
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Source: reuters.com
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