Despite the ongoing pandemic, the world is resuming normalcy with various countries reopening or in the process of reopening their borders (including China). Amidst this recovery, Singapore’s GDP is expected to grow around 3.5% in 2022. However, the Ministry of Trade and Industry (MTI) forecasts a dimmer outlook of 0.5% to 2.5% GDP growth for 2023.
Growth Is Likely To Moderate In 2023
The sharp recovery-driven growth in 2022 is likely to moderate in 2023. MTI highlighted three significant uncertainty and downside risks:
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tightening financial conditions as countries raise interest rates to combat high inflation. This could weigh down business growth as businesses find it harder and more expensive to borrow capital. The concurrent raising of interest rates by various economies could have a larger than expected impact.
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risks to financial stability if there are disorderly market adjustments. A severe market reaction to the tightening monetary policies could trigger a sharp repricing of assets, causing capital outflows and increasing debt servicing burdens
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geopolitical tensions and further escalations in the war in Ukraine. This could worsen supply disruptions, weigh on global trade and dampen confidences for both businesses and consumers.
Employment Remains Strong
In spite of these risks, employment remains strong. In Q32022, total employment growth is at a high of 75,900 in 3Q2022 while unemployment rates have returned to their pre-pandemic levels of around 2%. The ratio of job vacancies to unemployed persons was at 2.20, which is good news for job seekers as there are 220 jobs for every 100 unemployed persons. 1 in 2 Singapore employers report plans to hire for Q42022, according to ManpowerGroup’s employment outlook survey.
Likewise, business sentiment remains overall positive for SMEs. The 3Q2022 SME index remained positive for the 7th consecutive quarter at 51.9 (a reading of 50 indicates expansionary business activity).
However, growth is likely to be uneven across the industries. Here are the sectors that are expected to do well in 2023.
#1 Aviation And Tourism Related Sectors
The reopening of travel has boosted the recovery of Singapore’s aviation sector, and this will continue in 2023. China’s expected reopening in January 2023 will likely add on this boost.
Between September and November 2022, Singapore welcomed about 800,000 international visitors monthly or about 2.4 million in total. Tourism receipts are likely to benefit not just the aviation sector alone but also the related sectors including Accommodation, Food & Beverage, Retail, Entertainment. The resumption of MICE activities and events surrounding the F1 Singapore Grand Prix has also strengthened the demand for tourism-related sectors.
Job vacancy rates are also relatively high for these sectors in 3Q2022: 5.6% for Air Transport & Supporting Services, 10.3% for Accommodation, 6.3% for Food & Beverage Services and 6.5% for Retail Trade.
#2 Food & Beverage And Retail Sector
Buoyed by tourism receipts, consumer-facing sectors such as Food & Beverage and Retail are also having a resurgence as people return to their normal routines and spending habits. This resurgence showed up with the continued expansionary indication of the Food & Beverage sector in the SME Index.
Food & beverage sales volume rose by 28.% year-on-year (y-o-y) in 3Q2022. The increase was broad-based, led by the food caterers and restaurants, while cafes, food courts & other eating places and fast food outlets saw more modest growth. Overall retail sales volume increased by 8.7% y-o-y. Retail sales volume (excluding motor vehicles) was supported by a strong pickup in sales in segments with a greater reliance on in-person shopping and tourism demand, such as wearing apparel & footwear, department stores and cosmetics, toiletries & medical goods.
According to ManpowerGroup’s report. 55% of employers in the Restaurant and Hotel Industry and 45% of employers in the Wholesale & Retail Trade industry want to hire. However, they find it different to hire people with the necessary hard and soft skills. This is corroborated by the relatively high vacancy rates for these sectors in 3Q2022: 6.3% for Food & Beverage Services and 6.5% for Retail Trade.
Jobseekers can also tap on the revamped Career Conversion Programmes under the refreshed Retail Industry Transformation Map to position themselves for a brighter career in the sector.
Read Also: Reviving Retail And Making Singapore A Vibrant Lifestyle Hub: Retail Industry Transformation Map (ITM)
#3 Business Services
Professional services sector grew by 8.3% y-o-y in 3Q2022. This was mainly driven by expansions in the architectural & engineering, technical testing & analysis and the other professional, scientific & technical services segments.
According to the SME Index, the business services sector has remained expansionary since 1Q2021, with steady performance across all segments. Advertising and Exhibition grew from 53.7 in 2Q2022 to 54.2 in 3Q2022 while Business Consultancy continues its growth at 52.7.
Job vacancy rate for professional sector in 3Q2022 is around 5.5%, suggesting relatively strong demand for employment.
#4 Finance, Insurance And Real Estate
According to ManpowerGroup, job opportunities are expected to be most plentiful in the Finance, Insurance and Real Estate sectors, with an outlook of +66%, the strongest hiring outlook recorded. Specifically, employers in banking and financial services sectors are hiring aggressively to support their expansion into the digital financial services space.
In terms of growth, the finance & insurance sector grew at a slower pace of 0.4% y-o-y in 3Q2022. While payment processing grew, lending activity weakened as economic growth slowed. As the stock market underperformed in recent months, sentiment-sensitive segments such as fund management and security dealing activities also contracted.
Real estate sector expanded 11.7% y-o-y in 3Q2022. This growth was on the back of residential private property prices and rentals for commercial office and industrial space.
Job vacancy rates in 3Q2022 are 6.1% for financial and insurance services and 5.4% for real estate services.
Read Also: Singapore As A Leading International Financial Centre In Asia: Financial Services Industry Transformation Map (ITM) 2025
#5 Information, Communications And Technology (ICT)
While ICT remains a growth sector for Singapore, the recent layoffs from prominent tech firms have placed a damper on the hiring front. Yet, the sector still shows good employment growth amidst the current restructuring. Additionally, there is an overlap between the ICT and Finance sectors in the fintech space, which will continue the demand for IT professionals.
42% of employers in the tech sector expect a net increase in their staff in Q42022. Job vacancy rates for the sector are also high at 8.5%, suggesting strong hiring demand despite the recent wave of layoffs.
Read Also: Retrenchments Jump By 35% Amidst The Overall Positive Employment Market In MOM’s Labour Market Report Third Quarter 2022
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