Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 2Q 2022

1 Good morning, and welcome to this media briefing.

2 Details of Singapore’s economic performance for the second 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 second quarter of 2022, the Singapore economy grew by 4.4 per cent on a year-on-year basis, faster than the 3.8 per cent growth in the previous quarter. Growth in the second quarter was mainly supported by the Manufacturing, Other Services and Information & Communications sectors. On a quarter-on-quarter seasonally-adjusted basis, the Singapore economy contracted very slightly, by 0.2 per cent, which is a reversal from the 0.8 per cent expansion in the preceding quarter.

4 Taking into account Singapore’s GDP performance in the first quarter, the economy expanded by 4.1 per cent on a year-on-year basis in the first half of the year.

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

6 Since the last media briefing in May, unfortunately the global economic environment has deteriorated further. Stronger-than-expected inflationary pressures, and the more aggressive tightening of monetary policy in response to these inflationary pressures, are expected to weigh on growth in major advanced economies such as the US and Eurozone. The Eurozone economy is also at risk of a sharper slowdown towards the end of the year due to the persistent disruption in natural gas supplies from Russia. Meanwhile, China continues to grapple with a deepening property market downturn and recurring domestic COVID-19 outbreaks. Notwithstanding recent signs of a slight easing in global supply disruptions, the disruptions are likely to persist for the rest of the year as underlying factors such as the Russia-Ukraine conflict and China’s zero-COVID policy remain.

7 At the same time, downside risks in the global economy remain significant. These include further escalations in the Russia-Ukraine conflict, which could exacerbate inflationary pressures and dampen global growth even more; risks to financial stability if there are disorderly market adjustments to monetary policy tightening in advanced economies is another risk; and the third risk is of an escalation in geopolitical tensions in the region.

8 Domestically, Singapore has transited to living with COVID-19 with the progressive removal of almost all of our domestic and border restrictions. This has in turn supported the recovery of segments of the Singapore economy that had been badly affected by the pandemic. Notably, the recovery in air passengers handled at Changi Airport and international visitor arrivals to Singapore has been stronger than expected.

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

• As China is a key market for petroleum and chemicals products from Singapore, the weakness in China’s economic outlook has adversely affected the growth prospects of Singapore’s Chemicals cluster and the Fuels & Chemicals segment of the Wholesale Trade sector.

• At the same time, growth in the Water Transport and the Finance & Insurance sectors is expected to be dampened by the projected slowdown in major external economies.

10 On the other hand, the outlook for several other sectors in the Singapore economy has improved. For instance:

• The strong recovery in air passengers and international visitor arrivals is expected to benefit Aviation- and Tourism-related sectors like Air Transport and Arts, Entertainment & Recreation, as well as consumer-facing sectors like Food & Beverage Services.

• The easing of Singapore’s travel restrictions has also bolstered the recovery of the Professional Services sector as firms in the sector can now better engage their overseas clients.

11 Taking into account the performance of the Singapore economy in the first half of 2022, as well as the latest global and domestic economic developments, MTI has narrowed the GDP growth forecast for 2022 to “3.0 to 4.0 per cent”, from “3.0 to 5.0 per cent”.

12 Together with my panelists, I am now happy to take your questions.