Singapore’s economy goes up 3.4% in Q1 2022

It expanded 7.6 percent last year — the fastest full-year growth since 2010’s record 14.5 percent

Oxford Economics’ Priyanka Kishore and Sung-Eun Jung expect growth to slow down again in Q2. The Light Lab/Shutterstock

CNA reported that during Q1 2022, Singapore’s economy went up by 3.4 percent year-on-year (y-o-y). It fell short compared to the previous quarter’s 6.1 percent growth. 

According to a press release issued by the Ministry of Trade and Industry (MTI), Singapore’s economy expanded 7.6 percent last year — the fastest full-year growth since 2010’s record 14.5 percent.

The slow growth can be attributed to the manufacturing sector coming off a high base. 

MUFG Bank’s senior currency analyst Jeff Ng told CNA, “We’ve had a lot of strong demand for manufacturing during the pandemic. Already at such high levels and with Singapore also facing capacity constraints, it is unlikely for manufacturing to keep growing at the same pace that we observed for the past two years.”

However, easing COVID-19 restrictions for both domestic and international travel will have a positive effect on the country’s economy in the coming months. 

OCBC Bank’s chief economist and head of treasury research and strategy Selena Ling said, “The trade-related and modern services sectors should see more modest growth ahead, but domestic consumption and public infrastructure investments should drive growth in 2022.”

Oxford Economics’ Priyanka Kishore and Sung-Eun Jung expect growth to slow down again in Q2. They emphasised that heightened geopolitical uncertainties, rising inflation, and China continuing its zero-COVID-19 approach will be key factors, according to The Straits Times.

More: Singapore loses balance as supply chain sends property prices into overdrive

The manufacturing sector climbed by only 6 percent year-on-year (y-o-y). The electronics and precision engineering clusters continued to grow rapidly, due to the growing global demand for semiconductors and semiconductor equipment.

In the first quarter, the construction industry rose by 1.8 percent y-o-y, remaining  25.3 percent below pre-pandemic levels, with labour shortages continuing to stifle activity at building sites.

The group of services sectors that include wholesale and retail trade, as well as transportation and storage, increased by 3.2 percent y-o-y, building on the gain seen in the previous quarter.

MTI had projected GDP growth of three to five percent for the entirety of 2022. Maybank Securities Singapore analysts Chua Hak Bin and Lee Ju Ye said they expect MTI to downgrade its forecast to two to four percent in May, when the final GDP estimate for Q1 2022 is released.

The Property Report editors wrote this article. For more information, email: [email protected].

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