- Singapore upgraded its economic growth forecast for this year to 4.5%-5.5%, citing a stronger-than-expected performance in the first half and a boost from AI-related sectors and exports.
- The second quarter saw the economy expand 5.9%, up from 5.7% in advance estimates, driven by manufacturing, wholesale trade, and the finance and insurance sectors.
- The Ministry of Trade and Industry raised the growth forecast from 2%-4% set in February before the outbreak of the war in Iran.
- The impact of the U.S-Iran conflict has been less severe than initially feared, with a drawdown of oil inventories and substitution to alternative energy sources capping the rise in global energy prices.
- In June, core inflation rose to 1.6% from 1.4% in May, near the bottom of the Monetary Authority of Singapore (MAS) forecast range.
Singapore's Ministry of Trade and Industry (MTI) has significantly upgraded its economic growth forecast for 2023 to 4.5%-5.5%, driven by a robust performance in AI-related sectors and exports. This revision comes after the city-state's economy expanded by 5.9% in the second quarter, surpassing earlier estimates of 5.7%.1234
The new forecast is more than double the previous estimate of 2%-4%, which was set before the escalation of the conflict in Iran. MTI noted that the economic impact of the U.S-Iran conflict has been less severe than anticipated, with factors such as the drawdown of oil inventories and a shift to alternative energy sources helping to stabilize global energy prices.56
The second-quarter growth was primarily fueled by strong performances in the manufacturing, wholesale trade, and finance and insurance sectors. This growth trajectory may provide the Monetary Authority of Singapore with more flexibility to address inflationary pressures, which have seen core inflation rise to 1.6% in June from 1.4% in May, nearing the MAS's forecast range of 1.5%-2.5% for the year.7
Overall, Singapore's economic outlook reflects resilience amid global uncertainties, with the AI boom playing a pivotal role in driving growth.
“The upgrade marks the second revision this year, with the Ministry of Trade and Industry citing a stronger-than-expected first half and less severe U.S-Iran conflict impact. Core inflation rose to 1.6% in June, near the bottom of the MAS forecast range, potentially giving the central bank room to act.”
CNBC
