Singapore's post-COVID economy: a quick update

• Following the robust economic recovery from COVID-19 in 2021 and 2022, Singapore has revised their forecasted trajectory for 2023. Last week, the Ministry of Trade and Industry (MTI) announced a revised (and narrowed) forecast of 0.5 per cent to 1.5 per cent for 2023. This marks a significant change from the earlier 8.9 percent (2021) and 3.6 per cent (2022)- not necessarily a recessionary indicator as much as a marker of coming off the post-COVID high, and dealing with global economic headwinds due to its trade reliance.

• A strong dampener is Singapore's manufacturing sector, which drives roughly 20% of the city-state's economy but shrank by over 7% in the most recent quarter. This drop can be largely explained by a prolonged slump in Singapore's exports for the sector. Looking inwards at the domestic market as well, biomedical engineering (a key output historically) has seen a volatile few months while factory outputs of electronics have seen their worst drop since 2019. Across different forecasting services, much of this performance has been attributed to changes in global production lines, including the shortage of semi-conductor chips, and changes in different pharmaceutical ingredients.

• Amidst the manufacturing sector's dismal performance, the national tourism industry continues to pull its weight for Singapore's overall economic performance. In their early year forecasts, the Singapore Tourism Board anticipated between 12 to 14 million visitors for 2023 in what will mark a full year since the country's post-COVID reopening. The tourism sector typically accounts for roughly a tenth of the country's GDP. Thus far, these numbers are largely driven by Singapore's APAC neighbours in Indonesia, India and Australia- but the reopening of China is an interesting change to look out for in upcoming months.

• Business and consumer sentiments have also been largely positive for the travel sector- which can typically trickle down well into the supply chains of the associated accommodations, entertainment and F&B industries. With major activities in the MICE industry coming up (such as the F1 Grand Prix, the Forbes Global CEO Conference, the Earthshot Prize), the last two quarters of the year could be promising for this group of sectors.