(Bloomberg) — The global economy is suffering from a “disequilibrium phase” marked with unfavorable growth and inflation, and a worsening from here “cannot be ruled out,” according to Singapore’s central bank.
“In the quarters ahead, there is a risk that elevated inflation could lead to even tighter financial conditions, which could in turn weigh on already weakening economic activity,” the Monetary Authority of Singapore said in its biannual Macroeconomic Review published Thursday.
“The pullback in household and business spending, together with a further tightening in financial conditions, could potentially interact with existing vulnerabilities in the financial system, and exacerbate the economic downturn,” according to the report.
The trade-reliant city-state’s latest outlook on the local and global economy reflects persistent inflation and lingering growth worries amid increasingly uncertain geopolitics. While the global economy should avert a full-blown recession, things could get worse before they get better, and 2023 is seen as a painful year with activity slowing “sharply” in the US in the first half.
“Given where inflation is, a slowdown in the global economy is not altogether a bad thing,” MAS Managing Director Ravi Menon told Bloomberg Television this week. “It’s a good way to relieve those inflationary pressures — provided the slowdown is mild, short, and shallow.”
Singapore Central Bank Chief Urges Restraint on FX Intervention
The MAS reiterated its forecast for 3%-4% growth in Singapore this year and cited “below-trend” economic activity in 2023. A specific forecast for 2023 is due at the final third-quarter GDP release next month. The city-state is seeing further post-Covid healing in industries that benefit from border reopening, while its critical electronics sector has slipped into a “consolidation phase.”
Singapore is also not immune to the heavy price pressures that weigh on much of the world, prompting the MAS to tighten monetary policy settings for a fifth time since October 2021.
Core inflation, the MAS’s preferred gauge that’s been accelerating near a 14-year high, should come in around 4% this year and between 3.5%-4.5% in 2023, the central bank said. It would stay elevated in the first half of next year before “moderating more discernibly” in late 2023 amid demand softening, the MAS reiterated.
The MAS review also included a study done in collaboration with the ASEAN+3 Macroeconomic Research Office on the drivers of regional inflation. Global factors, especially world energy costs, weigh heavily on price growth, while inflation expectations “appear to have been largely well-anchored since 2000, perhaps reflecting greater central bank credibility in the region after the Asian Financial Crisis,” the study found.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
