Singapore sees 2022 GDP at bottom of forecast amid war and supply chain issues


People wearing protective face masks walk up an escalator at a shopping mall, amid the coronavirus disease (COVID-19) outbreak, in Singapore July 14, 2020. REUTERS/Edgar Su/Files

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SINGAPORE, May 25 (Reuters) – Singapore’s economy grew more than initially expected in the first quarter, but annual GDP is likely to be in the lower half of the government’s forecast range, officials said on Wednesday, citing the war in Ukraine and supply chain disruptions.

Southeast Asia’s financial hub is often seen as an indicator of global growth, as international trade eclipses its domestic economy.

Gross domestic product (GDP) rose 3.7% year-on-year in the first quarter, the Ministry of Trade and Industry (MTI) said, higher than the government’s prior estimate of 3.4% but matching analysts’ forecasts in a Reuters poll.

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“The external economic environment has unfortunately deteriorated (…) the strict measures implemented in China to contain its national outbreaks of COVID-19 are likely to weigh on its economy and contribute to bottlenecks in the global sourcing,” said Gabriel Lim, permanent secretary for trade and industry.

“As a result, global supply disruptions are expected to be more severe and prolonged than expected, potentially persisting through 2022. This in turn is expected to limit output and dampen GDP growth in some external economies more than what is expected. we had planned before,” he added. .

On a seasonally adjusted quarterly basis, the economy grew 0.7%.

The MTI kept its 2022 GDP growth forecast between 3% and 5%, but said growth is expected to be in the lower half of that range, due to uncertainties stemming from the Russian-Ukrainian conflict and strict measures. fight against COVID-19 in China. .

“Singapore made good progress in the first quarter, reopening the economy as all sectors appeared to outperform or normalize. Singapore,” said MUFG analyst Jeff Ng.

The city-state has removed most of its COVID-19 restrictions and eased entry requirements for travellers. Read more

INFLATION

Singapore also stuck to its inflation forecast which suggested core inflation – the central bank’s favored price measure – could peak at around 4% in the third quarter, before moderating in late 2022.

Singapore’s core inflation rose in April at its fastest pace in a decade, driven by higher inflation in food and utilities, official data showed on Monday. Read more

“The current monetary policy stance remains appropriate,” Edward Robinson, deputy chief executive of the Monetary Authority of Singapore, told a news conference on Wednesday.

“The cumulative effects of the (last) three monetary policy tightening moves will slow inflation dynamics,” he added.

Singapore’s Prime Minister Lee Hsien Loong said last week that global measures to tackle inflation could lead to a recession, but are needed to prevent inflation from getting worse.

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Reporting by Chen Lin in Singapore; Editing by Lincoln Feast and Richard Pullin

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