Singapore's economy grew by 3.8 per cent in 2022, down from 7.6 per cent in 2021, according to the Ministry of Trade and Industry (MTI) in a press release.

Based on advance GDP estimates for the fourth quarter of 2022, Singapore's economy grew by 2.2 per cent on a year-on-year basis during this quarter, down from 4.2 per cent growth in the third quarter.

On a quarter-on-quarter seasonally-adjusted basis, Singapore's economy grew by 0.2 per cent in the fourth quarter, compared to 1.1 per cent in the third quarter.

Earlier in November 2022, MTI had put up a forecast of about 3.5 per cent growth for Singapore's GDP in 2022, and a range of 0.5 to 2.5 per cent for 2023.

The final GDP estimates for the fourth quarter and whole of 2022 will be released in February 2023.

Manufacturing contracted by 3 per cent year-on-year in fourth quarter of 2022

The press release further highlighted that the manufacturing sector contracted by 3 per cent year-on-year in the fourth quarter of 2022, in a reversal from the 1.4 per cent growth in the previous quarter.

Output contracted in the electronics, chemicals and biomedical manufacturing clusters, outweighing expansions precision engineering, transport engineering and general manufacturing clusters.

The chief economist of OCBC Bank, Selena Ling, was quoted as saying that this contraction for the manufacturing sector was the first since the fourth quarter of 2020, The Straits Times reported.

Ling explained that this was due to "faltering" manufacturing momentum over concerns about a global recession, and a "pullback" in demand for electronics such as semiconductors.

On a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector expanded by 1.8 per cent in the fourth quarter, in a turnaround from the 3.9 per cent contraction in the preceding quarter.

As for the construction sector, it grew by 10.4 per cent year-on-year in the fourth quarter, up from 7.8 per cent growth in the previous quarter, as both public and private sector construction output continued to recover.

However, in absolute terms, the value-added of the construction sector remained 19.3 per cent below its pre-pandemic level in the fourth quarter of 2019.

On a quarter on-quarter seasonally-adjusted basis, construction expanded by 0.4 per cent in the fourth quarter, compared to an expansion of 3.8 per cent in the third quarter.

Expansions recorded in all of the services sectors

Expansions were recorded in every single services sector for the fourth quarter.

For the services sectors, the wholesale and retail trade, and transportation and storage sectors collectively grew by 2.3 per cent year-on-year in the fourth quarter, slower than the 5.7 per cent growth in the third quarter.

Within the wholesale and retail trade sector, both wholesale trade and retail trade activities expanded.

Meanwhile, growth in the transportation and storage sector was largely supported by the air transport segment, which saw growth due to the recovery in air passengers handled.

As for group of sectors comprising information and communications, finance and insurance and professional services sectors, MTI posted a growth of 2.9 per cent year-on-year in the fourth quarter, extending the 3.6 per cent growth in the previous quarter.

Growth in the information and communications sector was supported by continued demand for IT and digital solutions, while that in the professional services sector was mainly driven by the architectural & engineering, technical testing and analysis segment.

As for the finance and insurance sector, growth was mainly supported by activities auxiliary to financial services, which include payment processing activities.

With regard to the group of services sectors comprising accommodation and food, real estate, administrative and support, and others, the collective growth was 8.2 per cent year-on-year in the fourth quarter, extending the 9.3 per cent growth in the previous quarter.

MTI noted that the sectors within this group have expanded as activities continue to recover with the lifting of domestic and border restrictions since April 2022.

IMF head warns that a third of the global economy will be in recession

Meanwhile, the head of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that a third of the global economy will be hit by a recession, the Financial Times reported.

Georgieva pointed out that the U.S., EU and China are slowing down at the same time.

In October 2022, the IMF said that global growth is forecast to slow from six percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.

The continuing war in Ukraine, pressure from inflation and the raising of interest rates by banks were cited as factors.

Georgieva was also further quoted as saying that China faces a new short-term economic blow due to the rapid spread of Covid-19 following the drop of its containment policy.

She was further quoted by the Financial Times as saying that for the first time in 40 years, China's growth will either be at the same level or below that of global growth which means it could drag down worldwide economic activity.

Georgieva added, "That has never happened before."

Her comments have also suggested that the IMF could once again cut its economic forecast for 2023.

In his New Year Message, Prime Minister Lee Hsien Loong said that the "international outlook remains troubled", with the continuation of US-China tensions and the Russia-Ukraine conflict.

PM Lee said that "Singapore must brace ourselves for the uncertainties ahead", as Singapore's economy will be affected.

Top photo by Lily Banse via Unsplash