SINGAPORE – The second quarter for 2022 (Q2 2022) saw Singapore’s economy expand by 4.4% year-on-year (Y-o-Y), the republic’s MTI (Ministry of Trade and Industry) reported.
According to the MTI’s ‘Economic Performance in Second Quarter 2022’ report, Q2 2022’s performance saw a faster growth than the previous 3.8% expansion marked in Q1 2022.
Despite its performance, MTI had revised Singapore’s economic growth forecast for the year from its previous 3%-5% to 3% – 4%, after accounting the latest global and domestic economic developments.
However, on a quarter-on-quarter basis that is seasonally adjusted, the republic’s economy saw a slight contraction of 0.2%, a reversal from the 0.8% expansion seen in Q1 2022.
The MTI reported that the manufacturing sector grew by 5.7% Y-o-Y, extending the previous quarter’s rise of 5.5%.
It said that the quarterly growth was supported by output increases in different sectors including transport engineering, general manufacturing, electronics and precision engineering clusters, all which more than offset the output reductions in the biomedical manufacturing and chemicals clusters.
Moreover, the construction industry rose by 3.3% Y-o-Y, compared to the 2.4% Y-o-Y growth recorded in Q1 2022, as both public and private sector building output increased.
The MTI also stated that the transportation and storage sector had expanded by 5.1% Y-o-Y, an improvement of 4.3% from Q1 2022.
It said that the growth was bolstered by the air transport segment which grew robustly on the back of the substantial increase in the volume of air passengers at Changi Airport after Singapore transition to the Vaccinated Travel Framework (VTF) at the end of March 2022.
However, the accommodation industry dipped by 5.3% Y-o-Y, extending the 9.4% decline in Q1 2022.
The MTI explained that the sector’s performance remained weighed down by a decline in government demand for quarantine and stay-home-notice dedicated facilities compared to a year ago, although tourism demand had improved with a rapid recovery in international visitor arrivals following the implementation of VTF.
Speaking on the 2022 growth outlook for Singapore’s economy, the ministry highlighted that the global economic situation has deteriorated further since May of this year.
MTI stated that the stronger-than-anticipated inflationary pressures, which led to more aggressive monetary policy tightening, will likely weigh on growth in major advanced countries such as the US and Eurozone.
On the other hand, China continues to struggle with a deteriorating real estate market and the recurring COVID-19 outbreaks domestically.
“Despite recent indications of a minor reduction in global supply disruptions, the disruptions are anticipated to continue throughout the remainder of the year due to underlying issues like the Russia-Ukraine war and China’s zero-COVID policy,” MTI added.
The ministry added that economic growth in the US is anticipated to decelerate even more in the second half of the year (2H22). Similarly, the growth rate for the Eurozone is expected to be slow as well for 2H22, it stated.
For the Asian region, the MTI stated that China’s GDP growth is anticipated to accelerate in 2H22 due to the support of their government, pushing for more infrastructure spending.
Additionally, key Southeast Asian economies like Malaysia, Indonesia, and Thailand are expected to grow at a faster pace in the second half bolstered by the rebound in domestic and tourism demand after the easing of COVID-19 restrictions, and continued demand for their goods exports.
On the note of Singapore’s economy, the MTI stated that the republic’s external demand outlook has weakened in comparison to three months prior. Apart from that, downside risks in the global economy remain severe.
MTI further said that Singapore has transitioned to live with COVID-19 domestically through the steady elimination of practically all domestic and border restrictions.
“This has, in turn, aided in the recovery of sectors within Singapore’s economy which were severely impacted by the pandemic,” it added.
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