Singapore Business Review has reported that financial experts have warned of a possible “technical recession” in Singapore during the first half of 2023.
A technical recession is widely regarded as two consecutive quarters of negative growth.
This comes after the Singaporean economy contracted by 0.7% in Q1 2023 on a seasonally adjusted basis, as the Ministry of Trade and Industry reported.
The country’s gross domestic product (GDP) grew by a mere 0.1% on a year-on-year basis, down from 2.1% in the previous quarter.
The weaker performance across several sectors, particularly manufacturing, has raised concerns given that Singapore had performed better in the same quarter last year despite the pandemic. Singapore announced its exit from the acute phase of the pandemic as of 13 February this year.
“Singapore’s GDP has effectively slowed to below trend in 1Q23, which may persist in 2Q23 given the headwinds seen in manufacturing and trade,” said RHB, a financial services group, in quotes given to SBR.
While there is cause for concern, some experts remain optimistic. Xu Le, a lecturer of the Department of Strategy & Policy at NUS Business School, believes that the recovery of domestic demand in mainland China will soon alleviate the situation in the manufacturing sector.
UOB, a multinational banking organization, has stated that there is a risk of downward revisions to the GDP figures, which may show that the Singapore economy contracted YoY in Q1. However, the bank has expressed a positive outlook for the non-oil domestic exports, which are expected to improve in the second half of 2023.
RHB has also predicted that Singapore’s economy will improve in the latter half of the year. However, it remains to be seen whether the nation will recover from its current economic challenges.