Clearer ‘two–sided economy’ in Singapore expected in 2023: Maybank

Economic growth will likely decelerate to 1.5% next year.

Manufacturing will shrink whilst tourism and consumer-facing sectors will grow “at a healthy pace,” making Singapore posting a “two-sided economy” next year, Maybank said.

Analysts from the bank said the gross domestic product will possibly slow down to 1.5% in 2023 from 3.5% in 2022 before it recovers to 2.2% in 2024.

Maybank also cited that the inflation peaked but may still remain but decline slowly in 2023. 

“[The central bank] may tighten yet again at the April 2023 policy meeting, via another re-centering. The 3-month SIBOR rate will likely peak at around 4.8% in 2Q 2023, and 3-month SORA at 4.4%,” said Maybank.

China recovery

Once exports in China recover, it will boost ASEAN’s bilateral trade balances, Maybank said.

For the year 2022, all ASEAN countries excluding Singapore are suffering from merchandise trade deficits with China. But with China’s reopening, it will reduce the current account deficit for Thailand and Vietnam.

However, once China reopens, demand for energy and increase in prices could worsen the inflation situation and force central banks to tighten.

“A China reopening will benefit commodity exporters such as Indonesia and Malaysia, but hurt energy importers, including the Philippines and Thailand, and to a lesser extent, Vietnam and Singapore,” said Maybank.