Ukraine crisis darkens Singapore’s economic outlook
Published on: Wednesday March 02, 2022
Trade and Industry Minister Gan Kim Yong said inflationary pressures are expected to increase further in the short term, particularly due to an increase in the prices of oil-related products. (AP)
SINGAPORE: The Ukraine crisis has clouded Singapore’s economic outlook, according to Singapore’s Trade and Industry Minister Gan Kim Yong. Parliament during the debate on the 2022 budget statement here. “A lot will depend on how the conflict unfolds, the global response to the situation and the longer-term impact on the global economy,” he said.
However, he noted that what is clear is that inflationary pressures are likely to increase further in the near term, particularly through an increase in the prices of oil-related items first. “The downside risks to our economy have also increased significantly,” he said. Singapore had forecast its GDP to grow by 3.0% to 5.0% this year, with consumer price index (CPI) inflation for all items ranging between 2.5% and 3.5 %. Regarding the sanctions imposed on Russia by various countries and the disruption of supplies, Gan noted that global prices for energy and other commodities are expected to increase in the coming weeks: “A key area where we will be significantly affected by the conflict in Ukraine is energy. cost, as we import most of our energy needs,” he said. “We have already seen in recent months a surge in world prices for oil and natural gas, of which Russia is a major exporter,” he added. Citing an example, Gan said liquefied natural gas (LNG) prices had doubled from around $17 per million British thermal units (MMBtu) around six months ago to around $35 (1 USD = RM4.19) currently.
Global benchmark Brent also rose above $100 a barrel a few days ago, from an average of $71 last year, he added. “The crisis will also put a strain on global supply chains, as Russia and Ukraine are major exporters of raw materials such as wheat and metals such as nickel and palladium,” he said. . “Disruptions in the supply of these products will increase the prices of goods that use these products as an intermediate input. “A global nickel supply disruption could affect the production of stainless steel, which is used in the manufacturing and construction sectors,” Gan said. Meanwhile, disruptions in palladium supply will affect the semiconductor industry and, therefore, the broader technology goods market. Gan also said the republic must also be prepared for the subsequent impact on trade and investment flows. “A protracted conflict will affect business confidence and weigh on global economies, and impact their recovery from the Covid-19 pandemic,” he added. Earlier, Singapore announced that it would impose export controls on items that can be used directly as weapons in Ukraine to inflict harm or subjugate Ukrainians. The republic’s foreign minister, Dr. Vivian Balakrishnan, said Singapore would also block certain Russian banks and financial transactions linked to the Federation. On February 24, Russian President Vladimir Putin announced a special military operation in the Donbass region in eastern Ukraine. * Follow us on instagram and join our Telegram and or WhatsApp channel(s) for the latest news you don’t want to miss.
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