Singapore downgrades growth outlook as Q2 GDP misses forecasts

City state’s economy grew 4.4 percent year-on-year in the second quarter, less than official estimates.

Singapore’s economy expanded less than initially estimated in the second quarter and the government downgraded its growth projections for 2022, flagging risks to the global outlook from the Ukraine war and cost pressures.

Gross domestic product (GDP) grew 4.4 percent year-on-year in the second quarter, the Ministry of Trade and Industry (MTI) said on Thursday, slower than the 4.8 percent growth seen in the government’s advance estimate.

“Downside risks in the global economy remain significant … further escalations in the Russia-Ukraine conflict could worsen global supply disruptions and exacerbate inflationary pressures through higher food and energy prices,” said Gabriel Lim, permanent secretary of MTI, at a media briefing.

The Southeast Asian financial hub is often seen as a bellwether for global growth as international trade dwarfs its domestic economy.

On a quarter-on-quarter seasonally adjusted basis, the economy contracted 0.2 percent, compared with the government’s 0 percent estimate and the 0.8 percent growth in the first quarter.

“Our current baseline is that GDP will return to a slight positive [quarter-on-quarter] growth in the third and fourth quarter of this year,” said Yong Yik Wei, chief economist of MTI, at the media briefing. “So in other words we do not expect technical recession.”

Singapore defines two consecutive quarters of quarter-on-quarter economic contraction as a technical recession.

The MTI said it would narrow its 2022 GDP growth forecast range to 3-4 percent from 3-5 percent, adding the external demand outlook for the economy has weakened compared with three months ago.

Singapore Prime Minister Lee Hsien Loong this week warned that “low inflation levels and interest rates that we have enjoyed in recent decades” were unlikely to return anytime soon.

He added the country of 5.5 million must plan far ahead and transform industry, upgrade skills, and raise productivity.

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