SINGAPORE (CNA) – Singapore’s economy grew 3.4 per cent year-on-year in the first quarter of 2022, according to advance estimates released by the Ministry of Trade and Industry (MTI) yesterday.
This marked a slower pace than the previous quarter when the economy expanded 6.1 per cent. Economists polled by media had expected growth of 3.8 per cent.
On a quarter-on-quarter seasonally adjusted basis, Singapore’s gross domestic product (GDP) grew 0.4 per cent in the first quarter, slower than the 2.3 per cent in the preceding quarter.
The advance GDP estimates are computed largely from data gathered in the first two months of the quarter.
“They are intended as an early indication of GDP growth in the quarter and are subject to revision when more comprehensive data become available,” said MTI.
The advance estimates indicated that Singapore’s growth still “remained firmly in positive territory” despite headwinds from the Omicron variant, said an emerging Asia economist at research firm Capital Economics Alex Holmes.
COVID-19 caseloads surged at the start of the year due to the Omicron variant. With numbers falling last month, Singapore eased many of its safe management measures.
These include allowing more people to dine out together and permitting fully vaccinated travellers to enter without having to quarantine.
The slowdown in the first quarter was largely due to the manufacturing sector coming off a high base, said MUFG Bank’s senior currency analyst Jeff Ng.
“We’ve had a lot of strong demand for manufacturing during the pandemic. Already at such high levels and with Singapore also facing capacity constraints, it is unlikely for manufacturing to keep growing at the same pace that we observed for the past two years,” he told CNA.
Moving forward, the easing of COVID-19 restrictions, for both domestic activity and international travel, will support economic growth in the coming quarters, added Holmes.
“Overall, we expect growth of four per cent in 2022. That would mean that, having hit its pre-pandemic trend in the fourth quarter of last year, GDP is set to rise above its pre-crisis trend in the coming quarters,” he wrote in a note.
That said, some concerns remain amid possibilities of growth slowing down in major economies such as United States (US) and China.
Aggressive interest rate hikes to tackle inflation are likely to dampen growth in the US, said Mr Ng, while lockdowns in parts of China due to fresh COVID-19 outbreaks are fuelling further concerns about growth in the world’s second-largest economy.
“If US or China’s growth slow significantly, Singapore will likely be the most vulnerable in Southeast Asia,” he added.
