Economist says recession will ‘certainly hit’ Singapore

SINGAPORE: An economist recently said that a recession “will certainly hit Singapore,” which would explain the “more cautious” outlook from the Monetary Authority of Singapore (MAS), the country’s central bank.

This is how CIMB Private Bank economist Song Seng Wun answered a question last week on CNBC’s “Squawk Box Asia,” when the host, referring to a recent policy statement from MAS, asked, “Does that headline give you the heebie-jeebies and can Singapore avoid a recession?”

On Apr 14, MAS issued a statement that said that core inflation is expected to remain high in the next few months and that the country’s major trading partners will see slower growth for the rest of the year.

“Prospects for Singapore’s GDP growth this year have therefore dimmed,” MAS said, adding that “the risks to growth in the global economy and in Singapore are tilted to the downside.”

Moreover, “Singapore’s GDP growth is projected to be below trend this year. With intensifying risks to global growth, the domestic economic slowdown could be deeper than anticipated.”

Mr Song underlined that a possible recession would be due to the fact that a large part of Singapore’s gross domestic product comes from external trade.

He called the year to come, however, a very interesting time, saying that they could still be “upside surprises” due to the reopening of China.

The country’s economy grew by 3.6 per cent in 2022, which turned out to be a smaller figure than estimated. It had also considerably slowed in comparison to 2021.

Data released in February by the Ministry of Trade and Industry (MTI) said that the local economy grew by 2.1 per cent year-on-year in the last quarter, again a smaller growth rate than the previous quarter.

The seasonally adjusted quarter-to-quarter growth was 0.1 per cent.

MAS said in its latest statement that it will be minting the present rate of currency appreciation, which is expected to blunt the impact of increased import prices.

/TISG

This year’s GDP growth forecast to be at 0.5% to 2.5% after economy grew by 3.6% last year