Economic Outlook Is Cloudy In 2022

This story is part of Forbes’ coverage of Singapore’s Richest 2022. See the full list here.

Rising living costs are on top of Singaporeans’ minds, as the government warns higher inflation and interest rates are likely to persist. Food prices are expected to double to 8.2% in the second half of this year from 4.1% in June, according to Nomura Holdings, while interest rates have been on an upward trend, with three rate hikes since January. An increase in private spending is likely to help buoy the economy in 2022—GDP is targeted between 3% and 4%—but growth is seen dropping back to 3% by 2023 and 2.9% by 2024.

Asia’s Lion City recovered from an anemic 2020 to grow nearly 8% last year. But the nation, which marked its 57th birthday in August, faces stiff global headwinds, aggravated by Russia’s war in Ukraine and supply chain bottlenecks. There’s a modest 10% chance Singapore will enter a recession over the next 12 months, according to a Bloomberg survey. With core inflation running at 14-year highs, expenses as a percentage of income rose to 64% in May from 59% a year earlier, estimates DBS Bank.

The government has pledged to help struggling households and businesses cope with higher prices. It has also signaled a possible tax increase for the wealthy to narrow the income gap, which would help refill its coffers. Meanwhile, the central bank boosted the Singapore dollar to check imported inflation.

In his annual address last month, Prime Minister Lee Hsien Loong called for a “deeper response” to economic challenges by upgrading skills and raising productivity to help push up wages in the city-state. Another key initiative is the Singapore Green Plan 2030 that encompasses sustainability targets to tackle climate change, offering a new engine for growth.