MTI: Singapore Sustains 2023 GDP Growth Forecast at 0.5-2.5%

Singapore's Ministry of Trade and Industry (MTI) has retained its GDP growth forecast for 2023 at 0.5 to 2.5%, noting that growth is projected at the "mid-point of the range."

In the MTI's press release, it was shown that the economy grew by 0.4% year on year from January to March, a drop from the 2.1% growth in the preceding quarter.

Various sectors experienced contraction, such as the manufacturing sector (down by 5.6% YOY from the 2.6% contraction in the previous quarter); the wholesale trade sector (shrank by 2.5% from the 2.4% growth in the previous quarter); and the finance and insurance sector (contracted by 0.9% YOY, which expands the 0.3% contraction in the previous quarter).

On the other hand, the construction sector experienced growth (up by 7.2% YOY); the retail trade sector (up by 2.5%); the accommodation sector (up by 21.9%); the food and beverages sector (up by 12.2%); the information and communications sector (up 6.1%; the real estate sector (up by 9.2%); the professional services sector (growth of 5.7%); the administrative and support services sector (up by 11.4%); and other services industries (up by 5.3%).

The transportation and storage sector also went down to 0.7% YOY from 2.5% in the preceding quarter, although air and land transport in the sector grew.

Considering the economies of the United States, eurozone, and China, which are bound to contract this 2023 due to monetary policy tightening, property market stresses, and weakness in the industrial sector, respectively, the MTI assessed that Singapore's "external demand outlook for the rest of the year has weakened."

“Apart from the expected slowdown in the advanced economies, the electronics downcycle is likely to be deeper and more prolonged than earlier projected,” the MTI said. “Spillovers from China’s services-led recovery are also expected to remain weak given that services activities are less import-intensive than industrial activities.”

On the domestic front, the MTI reported that the aviation and tourism sectors have a positive growth outlook due to inbound tourism. The outlook for manufacturing and trade-related sectors, however, has debilitated, and expansion in the water transport, finance, and insurance sectors is expected to diminish.