Investors to get better assurance from Singapore despite macroeconomic woes

Economy grew by 4.8% year-on-year in the second quarter of 2022.

Even as geopolitical tensions continue to be a concern, the Lion City is still a safe haven for investors as its gross domestic product is likely to remain positive for 2022. 

Analyst RHB made the statement in a report, adding that growth in the country's economy will stem from positive growth in exports and services sector in the second half of 2022.

“Retail sales are rising and we expect it to grow 10% in 2022 (11% growth in 2021), aided by a tight labour market and higher tourism-led spending,” it said.

Whilst rising prices in the country accelerated to 6.7% in June, RHB said it is seeing that inflation will moderate by the end of 2022 and debt level will be “manageable.”

For the Straits Times Index (STI), RHB said the stock market index will provide positive returns in 2022 but its “upward move” might move slowly.

“STI’s forward price and earnings ratio is below its historical average, while its forward yield is still amongst the highest in Asia,” it also noted.

Tighten policy in October

The Monetary Authority of Singapore may also tighten its policy in the October meeting due to its “proactive” management in mitigating inflation risks.

“If policy tightening is faster or higher than expected, the Singaporean Dollar could outperform the rest of the regional currencies,” the analyst said.

The impact of higher interest rates on corporate earnings will also be “manageable” following the sufficient liquidity during post-pandemic recovery, said RHB.