Given persistent external economic headwinds as well as uncertainties, it was only prudent for the Ministry of Trade and Industry (MTI) to qualify that Singapore's GDP growth is likely to come in at the lower end of its 3 to 5 per cent forecast - that is, 3 to 4 per cent - this year. Since its forecast was made last November, new downside risks have emerged which are likely to weigh on the economy. First is Russia's war on Ukraine, which started in February, and has since heightened inflationary pressures through rising food and fuel prices and the blockage of transit routes. Second is the rolling lockdowns in China as part of its zero-Covid-19 policy in response to spreading infections from the Omicron variant of Covid-19, which has caused port closures, breakdowns in supply chains and an economic slowdown. And third is a cycle of aggressive rate hikes as well as quantitative tightening by the US Federal Reserve in response to rising inflation, which threatens to slow global growth and unsettle financial markets. MTI has also flagged the risks of new, more virulent strains of Covid-19 which may yet emerge.

Each of these developments is clouded in uncertainty as to its duration. Taken together, they make a compelling case for more circumspect economic forecasts, especially for an open economy like Singapore's. To be sure, some parts of the economy are still expected to do well according to MTI, including the electronics sector driven by robust demand for semiconductors, aviation and travel-related industries, professional services as well as consumer-facing sectors such as food and beverage and retail, which are benefiting from the reopening of the economy.