Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 3Q 2022

1 Good morning and welcome to this media conference.

2 Details of Singapore’s economic performance for the third quarter, and economic outlook for 2022 and 2023, are contained in the press release. Let me highlight a few key points.

3 In the third quarter of 2022, the Singapore economy expanded by 4.1 per cent on a year-on-year basis, easing from the 4.5 per cent growth in the previous quarter. This brought GDP growth in the first three quarters of 2022 to 4.2 per cent. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.1 per cent in the third quarter, reversing the 0.1 per cent contraction in the second quarter.

4 Since the last Economic Survey of Singapore media briefing in August, Singapore’s external demand outlook has softened further due to the weaker outlook for the Eurozone economy amidst an energy crunch, as well as for China as it continues to grapple with recurring COVID-19 outbreaks and a property market downturn.

5 For the rest of the year, the weaker external economic outlook will weigh on the growth of Singapore’s outward-oriented sectors, including the electronics and chemicals clusters. On the other hand, the strong recovery in air travel and international visitor arrivals is expected to continue to benefit our aviation- and tourism-related sectors, as well as consumer-facing sectors. The lifting of travel restrictions in Singapore and the region has also boosted the recovery of the professional services sector.

6 Taking these factors into account, Singapore’s GDP growth forecast for 2022 is narrowed to “around 3.5 per cent”, from “3.0 to 4.0 per cent”.

7 Looking ahead to 2023, GDP growth in most major economies is expected to moderate further, with sharp slowdowns projected in the US and Eurozone. On the other hand, GDP growth in China is expected to pick up from a low base but remain sluggish as its zero-COVID policy is likely to continue to constrain household consumption. Meanwhile, global supply disruptions are likely to continue into 2023 as the war in Ukraine drags on, even though the extent and frequency of disruptions is expected to ease.

8 At the same time, significant uncertainties and downside risks in the global economy remain.

• First, with many advanced economies raising interest rates simultaneously to combat high inflation, the impact of tightening financial conditions on global growth could be larger than expected.

• Second, financial stability risks could intensify if there are disorderly market adjustments to monetary policy tightening in the advanced economies.

• Third, further escalations in the war in Ukraine and geopolitical tensions among major global powers could worsen supply disruptions, dampen consumer and business confidence, as well as weigh on global trade.

9 Against this backdrop, the growth of outward-oriented sectors in Singapore is expected to weaken in tandem with the deterioration in external demand conditions. For instance, the electronics and precision engineering clusters are projected to be adversely affected by the fall in global semiconductor demand. At the same time, growth in the wholesale trade, water transport and finance & insurance sectors is expected to be dampened by the slowdown in major external economies.

10 On the other hand, the growth prospects of several sectors remain positive. In particular, the continued recovery in air travel and international visitor arrivals will support the expansion of aviation- and tourism-related sectors like air transport, accommodation and arts, entertainment & recreation.

11 Taking these factors into account, and barring the materialisation of downside risks, the Singapore economy is expected to grow by “0.5 to 2.5 per cent” in 2023.

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