After a challenging period during the Covid-19 pandemic in 2020, the Singapore economy bounced back last year and is now consolidating its recovery. But it could face a fresh set of headwinds in the wake of the Russia-Ukraine war, including persistent inflationary pressures, monetary tightening and new supply chain strains. Although GDP growth will moderate from last year's 7.6 per cent, the Monetary Authority of Singapore's (MAS) latest Macroeconomic Review released yesterday indicates that it will still remain above the trend at 3 per cent to 5 per cent in 2022.

Among other reassuring news, the review points out that with the easing of safe management measures and border restrictions, the drivers of growth will broaden to areas that have been under stress during the Covid-19 pandemic, such as domestic-oriented and travel-related sectors, including construction, retail, and food and beverage. As a result, and with the help of government policies such as the progressive wage model, the wage gap between export-oriented sectors and domestically focused parts of the economy - which had widened in favour of the former in recent years - will narrow, reducing income disparities. The outlook for the job market is also bright. The resident unemployment rate, which spiked in 2020, had fallen below pre-pandemic levels by February this year, to 3 per cent. The labour market is expected to remain tight in the course of this year, which, according to the MAS, will keep nominal wage growth above recent historical averages.