The Singapore government is expressing confidence in the recovery of the tourism sector, which is expected to play a vital role in driving the country’s economy and preventing a recession this year, despite the sluggish global economic outlook.
Officials have maintained their gross domestic product (GDP) growth forecast at 0.5-2.5 percent, stating that the economy is expected to expand within this range. This positive outlook is based on the belief that the revival of the tourism sector will stimulate growth in the service industry, a key component of Singapore’s economy.
The Ministry of Trade and Industry (MTI) recently released its forecast for the first quarter of 2023, revealing a year-on-year GDP decrease of 0.4%. While this figure represents a decline, it is an improvement compared to the previous forecast of a 0.7% contraction.
The Chief Economist of MTI commented on the forecast, stating, “We do not anticipate a technical recession this year. However, considering the downside risks and the weak economic outlook, we cannot rule out the possibility of certain sectors experiencing quarter-on-quarter contraction. Nevertheless, this is not our baseline forecast.”
Although MTI acknowledges the increased downside risks in the global economy, which may exert additional pressure on business consumption and investment, the Chief Economist, Ms. Yong, affirmed the resilience of the service sector. She highlighted that the sector continues to contribute to economic growth and employment, playing a crucial role in Singapore’s overall economic stability.
The Singapore government’s optimism regarding the recovery of the tourism sector is rooted in the belief that as travel restrictions ease and international borders reopen, the influx of visitors will reignite the hospitality and tourism industries. This, in turn, is expected to generate revenue, boost employment opportunities, and stimulate the broader service sector.