Impact of Forecasted Slowdown in Economic Growth in US, Europe and China

Mr Gan Thiam Poh asked the Minister for Trade and Industry what will be the economic impact to Singapore in view of the forecasted slowdown in economic growth in the United States, Europe and China for the next one year.

We expect the global economic environment to remain challenging in the year ahead. Growth in advanced economies, such as the US and Eurozone, is projected to slow due to the ongoing war in Ukraine, and as central banks intensify their synchronised tightening of monetary policy to curb rising inflation globally. Meanwhile, China continues to grapple with domestic COVID-19 outbreaks and a property market downturn. As the US, Eurozone and China are key trading partners to many countries around the world, a slowdown in these economies will have a negative impact on the global economy.

As a small and open economy, Singapore will be affected by the economic slowdown in the US, Eurozone and China and the broader slowdown in the global economy. In particular, we expect outward-oriented sectors, such as manufacturing, maritime transport and finance and insurance to be adversely affected. However, we expect recovery in tourism-related and consumer-facing sectors to provide some support to growth. On balance, while Singapore’s economy grew by 4.3% year-on-year in the first three quarters of the year, growth is likely to moderate in the fourth quarter. For 2022 as a whole, the Singapore economy remains on track to expand by "3% to 4%".

The Singapore economy is likely to see a further moderation in growth next year, in tandem with the projected global economic slowdown. At the same time, downside risks to the global economy, including from geopolitical tensions, remain significant. MTI is keeping a close watch on developments and we will provide an update on the 2022 and 2023 outlook for Singapore’s economy in November.