Singapore GDP Growth Slows in Q1

Facts

• Singapore has reported a Q1 year-on-year gross domestic product (GDP) growth of 0.4%, beating expectations. However, the GDP contracted by 0.4% on a quarter-on-quarter basis, falling short of the 0.1% growth recorded in the fourth quarter of 2022.¹
• The Ministry of Trade and Industry has warned that rising interest rates and disruptions could push the trade-reliant nation into a recession. The Ministry, however, maintained its 2023 growth forecast at between 0.5 and 2.5%; in 2022, Singapore's GDP grew by 3.8%.²
• Singapore's trade is worth three times its GDP, with its economy often reflecting global market trends. Last quarter, its manufacturing sector contracted 5.6%, while the Ministry projects Singapore's aviation and tourism to be strong.³
• China, Singapore's largest trading partner, has posted lower-than-expected growth as the political fight over the US debt ceiling increases anxiety in the market. Ministry chief economist Yong Yik Wei has stated that the group does not expect Singapore to face a recession this year.⁴
• The Ministry has predicted that Singapore's growth will fall in the middle between 0.5 and 2.5%, with the slowdown in manufacturing and in major economies leading them to weaken their economic outlook, not ruling out the possibility of negative quarterly GDP growth this year.⁴

Sources: ¹Reuters, ²Al Jazeera, ³RFI, and ⁴BNN.

Narratives

• Narrative A, as provided by Bloomberg. Singapore is rightly described as the "canary in the coal mine" of the global economy, as its economic outlook often mirrors the conditions in the rest of the world. We ought to be preparing ourselves for a global recession as post-COVID economic growth recedes and the war in Ukraine and other disruptions drag on.
• Narrative B, as provided by CNBC. Upon closer inspection of Singapore's economic projections, the doom-and-gloom crowd may be prematurely sounding the alarm. The Ministry of Trade and Industry has based most of its predictions on a manufacturing slowdown and less-than-stellar growth from China, its biggest trading partner. Singapore does not predict a recession on the horizon due to the narrow circumstances causing the slowdown.