A challenging year for the economy

After bouncing back by a robust 7.6 per cent in 2021 – the year following the outbreak of the Covid-19 pandemic – the Singapore economy has been cooling off. GDP growth in 2022 halved to 3.8 per cent and is likely to more than halve in 2023 to 1.8 per cent, according to the latest median forecast of private sector economists polled by the Monetary Authority of Singapore.

The Government has projected growth this year at 0.5 per cent to 2.5 per cent – a wide margin, which underlines the uncertainty of the global economic outlook. On Jan 1, International Monetary Fund (IMF) managing director Kristalina Georgieva warned that all three of the world’s major economies – the United States, China and the European Union – are likely to slow in 2023. The IMF may well downgrade its global growth forecast for the year from the 2.7 per cent it projected in October 2022. Given the synchronised monetary tightening in several countries which is still not over, many economists predict a global recession. Regionally, the big unknown is the fate of China’s economy in 2023. Its U-turn on its zero-Covid policy has seen a surge of infections, which will likely depress economic activity early this year. How long China’s slowdown will last will depend on the trajectory of the pandemic as well as conditions in its property market.