Singapore at excessive risk of technical recession amid exterior challenges

Singapore is going through a heightened danger of coming into a technical recession in the second quarter as exterior challenges proceed to impression the economic system. The city-state noticed a 0.4% decline in the economic system in the course of the first quarter compared to the previous three months, marking a reversal from the 0.1% growth in the fourth quarter of 2022. Nest egg experienced a technical recession within the second quarter of 2020 as a end result of Covid-19 pandemic.
Despite year-on-year growth of zero.4% between January and March, the nation’s reliance on commerce has been affected by a global financial slowdown, excessive inflationary pressures, and a downturn within the semiconductor business. Singapore’s non-oil home exports have suffered a seven-month downturn, with forecasts for 2023 downgraded after a weaker-than-expected first quarter.
Shivaan Tandon from Capital Economics said…
“Although it is not our base case scenario, there stays a high danger that the financial system slips right into a technical recession, either in (the second quarter) or in the second half of the 12 months.”
Tandon cited the fading resilience of superior economies in the latter half of the yr as a big factor impacting Singapore’s export demand.
Economists Chua Hak Bin and Lee Ju Ye from Maybank predict that the weaker efficiency in external sectors, similar to manufacturing, might offset the resilience in other areas like tourism. They consider that Singapore’s financial system may stagnate or enter a technical recession if the anticipated boost from China’s reopening doesn’t materialise within the second quarter.
Domestically, falling inflation is predicted to offer some reduction for households, however nominal wage growth and employment could expertise a sharp slowdown. Tandon famous that greater debt servicing costs because of rising rates of interest would dampen shopper spending within the coming quarters and limit consumption exercise.
However, some economists stay optimistic, with DBS economist Chua Han Teng not expecting a technical recession and forecasting a 2.2% development for the total year in 2023. Chua cited the ongoing restoration in journey and the return of Chinese vacationers as factors contributing to a sturdy outlook for the services cluster, particularly in hospitality and tourism..

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