Singapore could dodge recession in 2023: report

GDP growth slowed down to 3.6% in 2022.

Singapore may be able to dodge a recession in 2023 even as growth across sectors are expected to be uneven, Maybank reported. 

“We are expecting a 'half-full', rather than a ‘half-empty’ economy, as China’s reopening will cushion the impact from the slowdown in the US and EU,” Maybank reported.  

“The inverted US yield curve is pointing to a high 30% probability of recession in Singapore, but we think China’s reopening will reduce the odds of a recession and ‘decouple’ the overall economy from the manufacturing downturn.”

Read more: GDP growth to ease in 2023 at 0.5%-2.5%

The gross domestic product (GDP) expanded at a slower pace in the fourth quarter to 2.1% and to 3.6% over the whole period of 2022. This is in comparison to the 8.9% GDP growth seen in 2021. 

For 2023, the Ministry of Trade and Industry (MTI) maintained its forecast that the economy will expand between 0.5% to 2.5%. 

Maybank, likewise, maintained its growth forecast of 1.7%, slightly above MTI’s figures. 

“Growth will be uneven with manufacturing and trade-related services in recession, while construction and services will continue to expand with the reopening and recovery in the hospitality, aviation, and consumer-facing sectors,” the report also read. 

“Despite slower growth, we expect the MAS to tighten monetary policy again in April 2023, probably via another re-centering, to reduce intense core inflation pressures amid a tight labour market.”

UOB’s projection, meanwhile, stood at 0.7% for 2023, which is within the range of MTI’s growth forecast. 

UOB also noted that the US and European economies could enter a “shallow recession” amidst aggressive tightening of monetary policy that could impact Singapore’s manufacturing and external-oriented service sectors. 

“We expect the official and electronics sector PMIs for Singapore to stay in contraction territory in the first three months of 2023 and the weakness may extend for at least another quarter (or even two),” the UOB report read. 

“We maintain our Singapore 2023 manufacturing forecast to contract by 5.4% due to the faltering outlook for electronics and weaker external demand.”