Singapore Downgrades 2023 GDP Forecast to 1.1% on Export Uncertainty

15 Feb, 2024

Singapore Downgrades 2023 GDP Forecast to 1.1% on Export Uncertainty

Singapore revised its 2023 economic growth rate to 1.1%, a slight dip from the initial 1.2% estimate, primarily due to weak exports in December. The adjustment precedes the government's unveiling of the 2024 budget, expected to address rising living costs.

In contrast to the revised 3.8% growth in 2022, last year's GDP expansion was more moderate. The downward revision considered updated data and Trade and Industry Ministry revisions, notably reducing the growth rate for October to December from 2.8% to 2.2%.

Beh Swan Gin, the ministry's permanent secretary, cited substantial downside risks in the global economy during an online briefing, highlighting monetary tightening effects and idiosyncratic cost shocks.

Singapore's exports, particularly electronics and pharmaceuticals, faced challenges, with December's benchmark non-oil domestic exports dropping by 1.5% year-on-year. Despite this, the nation maintains its 2024 growth projection of 1% to 3%, expecting recoveries in semiconductor and other exports.

The country grapples with inflationary pressures exacerbated by post-COVID conditions and the Ukraine conflict. December's inflation rates hovered around 3.7% for headline inflation and 3.3% for core inflation.

The government's January move to raise goods and services tax to 9% from 8%, alongside impending property tax hikes, adds to inflationary concerns. Observers anticipate measures in the upcoming budget to mitigate these challenges, especially as Deputy Prime Minister Lawrence Wong is poised to lead the ruling party.

As Singapore monitors China's economic landscape, expecting a gradual recovery in the second half of 2024, observers anticipate potential incentives to stimulate the local economy. Amid global uncertainties, the budget's presentation assumes significance, potentially shaping Singapore's economic trajectory under evolving leadership dynamics