Impact of Forecasted Slowdown in Economic Growth in US, Europe and China
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the economic impact on Singapore from the forecasted growth slowdown in the United States, Europe, and China, as raised by MP Gan Thiam Poh. Minister for Trade and Industry Gan Kim Yong explained that while outward-oriented sectors like manufacturing and finance will be adversely affected, tourism and consumer-facing sectors should provide support. Although the economy grew 4.3% in the first three quarters, Minister for Trade and Industry Gan Kim Yong noted that growth will likely moderate in the fourth quarter and into 2023. Singapore remains on track for 3% to 4% expansion in 2022, despite significant downside risks from geopolitical tensions and synchronized monetary policy tightening. The Ministry of Trade and Industry will continue monitoring global developments and provide an updated economic outlook for the upcoming year in November.
Transcript
41 Mr Gan Thiam Poh asked the Minister for Trade and Industry what will be the economic impact to Singapore in view of the forecasted slowdown in economic growth in the United States, Europe and China for the next one year.
Mr Gan Kim Yong: We expect the global economic environment to remain challenging in the year ahead. Growth in advanced economies, such as the US and Eurozone, is projected to slow due to the ongoing war in Ukraine, and as central banks intensify their synchronised tightening of monetary policy to curb rising inflation globally. Meanwhile, China continues to grapple with domestic COVID-19 outbreaks and a property market downturn. As the US, Eurozone and China are key trading partners to many countries around the world, a slowdown in these economies will have a negative impact on the global economy.
As a small and open economy, Singapore will be affected by the economic slowdown in the US, Eurozone and China and the broader slowdown in the global economy. In particular, we expect outward-oriented sectors, such as manufacturing, maritime transport and finance and insurance to be adversely affected. However, we expect recovery in tourism-related and consumer-facing sectors to provide some support to growth. On balance, while Singapore’s economy grew by 4.3% year-on-year in the first three quarters of the year, growth is likely to moderate in the fourth quarter. For 2022 as a whole, the Singapore economy remains on track to expand by "3% to 4%".
The Singapore economy is likely to see a further moderation in growth next year, in tandem with the projected global economic slowdown. At the same time, downside risks to the global economy, including from geopolitical tensions, remain significant. MTI is keeping a close watch on developments and we will provide an update on the 2022 and 2023 outlook for Singapore’s economy in November.