Senior Economist at UOB Group Alvin Liew assesses the latest GDP figures in Singapore.

“Singapore’s final 3Q22 GDP came in at 4.1% y/y from 4.5% growth in 2Q22, lower than our call of 4.2% and Bloomberg poll of 4.3%. On a seasonally adjusted basis, 3Q22 GDP rebounded by 1.1% q/q, from -0.1% in 2Q22. Manufacturing sector slowed as anticipated to 0.8% y/y from 5.6% in 2Q22 while services sector outperformed with a 5.8% y/y gain compared to 5.0% in 2Q22. All major services clusters expanded on a y/y basis except for accommodation.”

“The message from the MTI continued to be one of greater caution, especially on the moderation in external outlook and heightened external risks. It was noted that MTI has removed the mention of COVID-19 risks compared to its Aug report. MTI now expects GDP growth to “be around 3.5 percent” for 2023 and moderate to “0.5 to 2.5 percent” for 2023. GDP Outlook – With the 3Q22 outcome largely within our expectations, we keep our GDP growth outlook for Singapore at 3.5% for 2022, before easing to 0.7% in 2023 to reflect the broad slowing in external outlook next year.”

MAS Outlook – The latest official 3Q GDP data and 2023 growth outlook does not change our monetary policy outlook. Singapore’s monetary policy is further into a restrictive setting after five rounds of tightening since Oct 2021. With the MAS pulling only one lever in its Oct 2022 decision, there is still room for further tightening into 2023, especially if core inflation does not show signs of moderation. While we believe off-cycles are likely done for the remainder of 2022, it may still be a possibility especially in early 2023.”

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