SINGAPORE: The Ukraine crisis has clouded Singapore’s economic outlook, according to Singapore’s Minister for Trade and Industry Gan Kim Yong.
“The actual impact on gross domestic product (GDP) growth and inflation is difficult to estimate at this stage given the uncertainties,” he said in Parliament when debating 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 rise further in the near term, especially through an increase in the prices of oil-related items in the first instance.
“The downside risks to our economy have also increased significantly,” he said.
Singapore had projected that its GDP would grow by 3.0 per cent to 5.0 per cent this year, with the Consumer Price Index (CPI)-All Items inflation at between 2.5 per cent and 3.5 per cent.
On sanctions being imposed on Russia by various countries and the disruption to supplies, Gan noted that global prices of energy and other products are set to rise in the coming weeks,
“One key area we will be significantly impacted 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 spike in the global prices of oil and natural gas, of which Russia is a major exporter,” he added.
Citing an example, Gan said the liquefied natural gas (LNG) prices have doubled from about US$17 per million British thermal units (MMBtu) about half a year ago to about US$35 (US$1=RM4.19) currently.
Global benchmark Brent crude also surged past US$100 per barrel a few days ago, compared to the US$71 average last year, he added.
“The crisis will also further strain global supply chains as Russia and Ukraine are major exporters of commodities such as wheat, and metals like nickel and palladium,” he said.
“Supply disruptions for these commodities will raise prices of goods that use these commodities as intermediate input.
“A global disruption in the supply of nickel could affect the production of stainless steel, which is used in the manufacturing and construction sectors,” Gan said.
Disruptions to palladium supply meanwhile will affect the semiconductor industry, and consequently the wider technology goods market.
Gan also said the republic must also be prepared for the follow-on 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 will impose export controls on items that can be used directly as weapons in Ukraine to inflict harm or to subjugate the Ukrainians.
The republic’s Minister for Foreign Affairs Dr Vivian Balakrishnan said Singapore will also block certain Russian banks and financial transactions connected to the Federation.
On February 24, Russian President Vladimir Putin announced a special military operation in eastern Ukraine’s Donbas region.
* Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss.
* Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.