Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 1Q 2022

Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 1Q 2022

1 Good morning, and welcome to this virtual media briefing.

2 Details of Singapore’s economic performance for the first quarter of 2022, as well as the outlook for 2022, are contained in the press release. Let me highlight a few key points.

3 In the first quarter of 2022, the Singapore economy grew by 3.7 per cent on a year-on-year basis, moderating from the 6.1 per cent expansion in the previous quarter. Growth during the first quarter was mainly supported by the manufacturing, finance & insurance and professional services sectors. On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 0.7 per cent, slower than the 2.3 per cent growth recorded in the previous quarter.

4 Let me now turn to the economic outlook for 2022.

5 Since the last media briefing in February, the external economic environment has deteriorated, due in part to the Russia-Ukraine conflict. In particular, the conflict has disrupted the supply of energy, food and other commodities, thereby exacerbating global inflationary pressures and adversely affecting the growth of many economies, including the Eurozone. Meanwhile, stringent measures implemented in China to contain its domestic COVID-19 outbreaks are likely to weigh on its economy and contribute to global supply bottlenecks. Consequently, global supply disruptions are projected to be more severe and prolonged than earlier expected, potentially persisting throughout 2022. This, in turn, is likely to constrain production and dampen GDP growth in some external economies by more than previously projected.

6 Downside risks in the global economy remain significant. Key risks include a further escalation in the Russia-Ukraine conflict; more severe-thanexpected global supply disruptions due to renewed COVID-19 outbreaks; and risks to financial market stability if monetary policy tightening in advanced economies is faster than expected.

7 Domestically, the COVID-19 situation has stabilised following the cresting of the Omicron wave. This, along with our high vaccination rate and strong booster take-up, has allowed for a faster-than-expected lifting of our domestic and border restrictions since end-March.

8 Against this backdrop, the growth outlook for some outward-oriented sectors in the Singapore economy has weakened this year. For instance:

• As China is a key market for petroleum and chemicals products from Singapore, its economic slowdown is likely to adversely affect the growth prospects of Singapore’s chemicals cluster and the fuel & chemicals segment of the wholesale trade sector.

• Meanwhile, growth in the water transport segment is expected to be weighed down by prolonged supply disruptions and port congestions worldwide.

9 Nonetheless, there are also sectors in the Singapore economy whose growth outlook have improved:

First, the electronics cluster is expected to expand more strongly than earlier projected, bolstered by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres.

Second, the rollout of the Vaccinated Travel Framework, alongside the easing of border restrictions in regional economies, is expected to boost the growth of the professional services sector and the recovery of aviation- and tourism-related sectors like air transport and arts, entertainment & recreation.

Third, the relaxation of domestic and border restrictions since end-March will support a faster pace of recovery in consumer-facing sectors such as retail trade and food & beverage services, as well as further alleviate labour shortages in sectors that are reliant on migrant workers such as construction.

10 Taking into account the performance of the Singapore economy in the first quarter, as well as the latest global and domestic economic developments, MTI continues to expect the Singapore economy to grow by “3.0 to 5.0 per cent” in 2022, although growth is now more likely to come in at the lower half of the forecast range.

11 Together with my panel members, I am now happy to take your questions.

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