{"id":9439,"date":"2022-08-21T08:00:00","date_gmt":"2022-08-21T00:00:00","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=9439"},"modified":"2022-08-21T09:13:43","modified_gmt":"2022-08-21T01:13:43","slug":"what-businesses-should-know-about-singapores-economic-outlook-for-2022","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/what-businesses-should-know-about-singapores-economic-outlook-for-2022\/","title":{"rendered":"What Businesses Should Know About Singapore’s Economic Outlook For 2022"},"content":{"rendered":"\n

As inflation continues to rise in Singapore and MAS adjusts the GDP growth forecast for Singapore to 3% to 4%, 2022 has been a year of higher than expected inflation and challenges. Paying attention to the overall economic outlook for Singapore would be beneficial for businesses to help anticipate and even pre-empt further challenges in 2022.<\/p>\n\n\n\n

According to Economic Survey Of Singapore for Second Quarter 2022<\/a>, Singapore\u2019s economy expanded 4.4% on a year-on-year basis for 2H2022.<\/p>\n\n\n\n

Read Also: Jobs Market Expected To Grow In 2H 2022 Despite Global Uncertainty Based On Latest Business Expectations Surveys<\/a><\/em><\/strong><\/p>\n\n\n\n

Manufacturing Is The Highest Driver Of Growth<\/strong><\/h3>\n\n\n\n

Of the 4.4% expansion in Singapore\u2019s economy in 2Q2022, manufacturing contributed the greatest growth in real GDP. The manufacturing sector grew by 5.7% in 2Q2022. This was mainly in transport engineering, general manufacturing, electronics and precision engineering. However, biomedical manufacturing and chemicals sub-sectors showed output declines. The following top 3 growth contributors were in other services and information & communications sectors.  <\/p>\n\n\n\n

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However, sectors that showed the most expansion in terms of growth rate were Food & Beverage Services, Real Estate and Retail Trade. With spike in demand as Singapore eased out of restrictive safe management measures, businesses in these consumer-centric sectors would have also seen an increase in business activity<\/p>\n\n\n\n

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For businesses, this improvement in economic activity after the anemic pandemic periods is a relief.<\/p>\n\n\n\n

However, Business Costs Have Also Increased, Especially For Labour<\/strong><\/h3>\n\n\n\n

Unfortunately for business, the costs have increased for both labour and business costs.<\/p>\n\n\n\n

Unit labour cost (ULC) for the overall economy increased by 9% in 2Q2022. This has increased from 7.7% in 1Q2022. This was driven by an overall increase in total labour cost per worker. Unit labour cost for services industries increased by 8.7%, of which accommodation showed the highest increase of 30.5%. Labour costs for manufacturing also increased by 9.3%.<\/p>\n\n\n\n

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The unit business cost (UBC) for manufacturing also increased by 5.2%, due to increase in manufacturing unit labour cost (9.3%) and unit services cost (3.9%) which was more than the fall in unit non-production taxes (-7.7%).<\/p>\n\n\n\n

As the employment market continues to be tight, labour costs are likely to remain elevated. Especially as more industries move towards the progressive wage model<\/a>, reduction in labour costs would need to come from gain in labour productivity.<\/p>\n\n\n\n

Read Also: 4 Job Sectors In Singapore That Will Do Well In 2022<\/a><\/em><\/strong><\/p>\n\n\n\n

Productivity Is Stagnant At 0.8%<\/strong><\/h3>\n\n\n\n

Unfortunately, overall labour productivity as measured by real value added per actual hour worked is stagnant at 0.8% in 2Q2022, a decline from 2.3% in 1Q2022.<\/p>\n\n\n\n

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While the food & beverage services (23.0%), real estate (12.5%), retail trade (11.7%) sectors showed strong productivity gains, they were not enough to offset the productivity declines in sectors like construction (-8.2%) and accommodation (-7.2%) and finance & insurance (-2.2%).<\/p>\n\n\n\n

For businesses struggling with employment (be it hiring or retention), a focus on improving business operations to optimise for productivity may be a better option.<\/p>\n\n\n\n

Singapore\u2019s Exports Have Increased<\/strong><\/h3>\n\n\n\n

One consequence of high inflation is the strength of the Singapore dollar as MAS tightens monetary policy to manage imported inflation. While a stronger Singapore dollar would make exports more expensive, this has not adversely affected exports in 2Q2022.<\/p>\n\n\n\n

Merchandise exports increased by 25.0% in 2Q2022, an increase from 18.8% in 1Q2022. Domestic exports increased by 28.7%, of which oil exports increased by 73.0% due to higher oil prices or increased by 8.2% in terms of volume. Re-exports, which increased by 21.8%, also contributed to the overall merchandise exports.<\/p>\n\n\n\n

Services exports also showed an increase of 13.2% in 2Q2022, up from the 10.8% in 1Q2022. This was largely due to export of transport services, travel services and other business services.<\/p>\n\n\n\n

Read Also: The Singapore Dollar Is Strengthening Against Foreign Currencies. What Does This Means For Singapore Businesses?<\/a><\/em><\/strong><\/p>\n\n\n\n

While Singapore\u2019s economy has recovered admirably from tight pandemic restrictions, the Ministry of Trade and Industry (MTI) assesses that external demand outlook for Singapore\u2019s economy has weakened and downside risks remain, such as further escalation of the Russian-Ukraine conflict, risks to the financial markets, geopolitical tensions and emergence of a more virulent COVID-19 strain. In light of these developments, MTI has adjusted Singapore\u2019s GDP growth forecast for 2022 to \u201c3.0 to 4.0%\u201d, a narrowing from \u201c3.0 to 5.0%\u201d<\/p>\n\n\n\n

While businesses can take heart at the relatively positivity of Singapore\u2019s economy in 2Q2022, they need to be responsive to changes and adapt to any possible downside risks, or even take pre-emptive action if possible. This may mean hedging against further inflation or setting in place business contingency plans for potential disruptions.<\/p>\n","protected":false},"excerpt":{"rendered":"Singapore’s economy grew 4.4% in 2Q2022\n","protected":false},"author":11,"featured_media":9445,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[364],"tags":[1492,54,1134,634],"yoast_head":"\nWhat Businesses Should Know About Singapore's Economic Outlook For 2022 | DollarsAndSense Business<\/title>\n<meta name=\"description\" content=\"Singapore\u2019s economy expanded 4.4% on a year-on-year basis for 2H2022. 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