Singapore Sees Travel Boom Shielding Economy From Recession
(Bloomberg) — Singapore is confident that a rebound in travel that’s boosting the services sector will help the island’s economy avoid a recession this year despite a darkening global outlook.
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Authorities retained their forecast for gross domestic product growth to range between 0.5% and 2.5%, with the actual expansion seen likely coming in at the midpoint. The Ministry of Trade and Industry also published on Thursday final estimates for the first quarter, which showed GDP declined an annualized 0.4% from the previous three months, better than the 0.7% drop estimated earlier.
“We do not expect technical recession this year,” said Yong Yik Wei, MTI’s chief economist. “Given the downside risks and the weakening outlook, we cannot rule out the possibility that there could be some quarters of negative Q-o-Q growth this year. But again, that’s not our baseline,” she said, referring to the sequential performance.
The Singapore dollar traded 0.1% lower against the greenback, as the local currency looked past the marginally better-than-expected final first quarter GDP figure.
While the ministry acknowledged that downside risks in the global economy have risen and they could weigh more heavily on consumption and business investments, Yong said the services sector continues to be resilient and should lend some support to growth as well as to employment.
The outlook for aviation and tourism sectors remains sanguine, boosting transport, hotels, entertainment and recreation, the ministry said.
The growth view comes despite a deteriorating global demand outlook, with the US economy exposed to potential strain from a standoff in debt ceiling talks that prompted a rare negative rating watch on the world’s largest economy by Fitch Ratings. Also, weaker-than-expected economic data from China have meant that the growth boost expected from the reopening of the world’s No. 2 economy are yet to fully materialize.
Singapore’s economy relies heavily on trade and is vulnerable to shocks resulting from disruptions in commerce, especially involving China, the city-state’s No. 1 trading partner. In a separate statement Thursday, Enterprise Singapore said it expects non-oil domestic exports to decline between 8%-10% in 2023.
That downgrade to the forecast takes into account the worse-than-expected exports performance, with outbound shipments recording a contraction every month so far this year.
Year-on-year, the economy grew 0.4% in the first quarter, compared with an earlier estimate of a 0.1% expansion, data from MTI showed.
“Even if the Singapore economy were to slip into a technical recession, it is really very much manufacturing- and trade-led,” said MTI’s Yong.
–With assistance from Kevin Varley, Tomoko Sato and Marcus Wong.
(Updates with details throughout.)
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India's economy likely gained pace in March quarter – Financial Post
NEW DELHI — India is set to release data on Wednesday that is expected to show the economy grew by 5% in the January-March quarter from a year earlier, accelerating from 4.4% in the previous quarter due to steady urban demand and government spending.
The median forecast from a Reuters poll of economists hinged on the robust performance of services like travel and retail, and the boost given to demand by falling food prices and the drop in oil prices globally.
Moving forward, India could be at the mercy of a potential global slowdown.
“Slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility” could pose downside risks to the economic growth, Reserve Bank of India, the central bank, warned in its annual report on Tuesday.
The last official estimate for the full 2022/23 fiscal year put growth at 7%, though that could be revised when the GDP data is released on Wednesday at 1200 GMT. Some private economists reckoned growth in the year to March 31 could turn out around 6.8%.
During the March quarter, high frequency indicators showed that a rise in urban incomes had boosted sales of expensive cars, Apple mobile phones, and air travel.
The performance looks less impressive considering that the economy was still working through the tail-end of the pandemic during the previous year.
Farm and manufacturing workers suffered flat growth in real wages due to high inflation, and that kept sales of motorbikes, low-end consumer goods and railway traffic below pre-pandemic levels.
Prime Minister Narendra Modi remains widely popular after nine years in power, but his Bharatiya Janata Party lost assembly elections in the southern state of Karnataka this month as the opposition Congress party promised to step up subsidies for households hit by inflation and unemployment.
Modi must call for a national election by early 2024, and there a several more state polls due before then.
Lack of good paying jobs remains a major issue among the youth as reflected in unemployment rate rising to 8.11% in April and more workers joining the workforce, according to Mumbai-based think tank Centre for Monitoring Indian Economy.
(Reporting by Manoj Kumar; Editing by Simon Cameron-Moore)
Canada's economy grew by more than expected in first quarter, upping odds of rate hike next week – CBC.ca
The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter of 2023, Statistics Canada reported Wednesday.
The latest data shows growth beat out the federal agency’s own forecast of 2.5 per cent for the quarter. A preliminary estimate suggests the economy grew by 0.2 per cent in April, after remaining flat in March.
The ongoing resilience in the economy will likely spur discussions of a potential rate hike, as the Bank of Canada is expected to make its next interest rate announcement next week.
The relatively strong GDP showing had investors increasing the odds of a rate hike when the central bank meets next week. Prior to the GDP numbers, trading in investments known as swaps was implying a litle over a one-in-four chance of a hike.
Now, those odds are better than one-in-three.
Statscan says growth in exports and household spending helped spur growth in the first quarter. On the other side of the ledger, slower inventory accumulations as well as declines in household investment and business investment in machinery and equipment weighed on growth.
Tuan Nguyen, an economist with consulting firm RSM Canada, says the GDP numbers “blew past expectations.”
“After a slow final quarter of last year, the Canadian consumers and businesses came out strong in the first quarter, defying rising recession concerns that most market participants have been talking about,” Nguyen said. “There is no doubt that the data pointed to a hot economy, explaining why underlying inflation has remained elevated.”
Stubbornly high inflation
The Canadian economy has managed to continue outperforming expectations, despite the Bank of Canada hoping high interest rates would cause a more profound pullback by consumers and businesses.
The household spending figures show spending up on both goods and services in the first three months of the year, after minimal growth in the previous two quarters.
However, the report notes disposable income fell for the first time since the fourth quarter of 2021. The federal agency says disposable income declined by one per cent, largely due to the expiration of government measures aimed at helping people cope with inflation.
The central bank paused its rate-hiking cycle earlier this year, keeping its key interest rate at 4.5 per cent — the highest it’s been since 2007.
But the central bank’s governor, Tiff Macklem, has signalled that the bank is still trying to figure out if interest rates are high enough to quash inflation.
The headline inflation rate ticked up slightly to 4.4 per cent in April, remaining well above the central bank’s two per cent target.
What the JOLTS Report tells us about the economy – Yahoo Canada Finance
The Canadian Press
National Bank reports Q2 profit down from year ago, raises quarterly dividend
MONTREAL — National Bank of Canada raised its quarterly dividend and reported its second-quarter profit fell compared with a year ago as it faced higher non-interest expenses and increased provisions for bad loans. The Montreal-based bank said Wednesday it will now pay a quarterly dividend of $1.02 per share, up from 97 cents. The increased payment to shareholders came as National Bank reported a profit of $847 million or $2.38 per diluted share for the quarter ended April 30, down from a profit
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Cigarettes in Canada will soon bear their own health warnings – CTV News
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