The city-state’s growth slowed sharply in the fourth quarter, clouding the outlook for 2023.

Singapore’s economy has grown faster than expected in 2022, according to government figures.

The economy of the Southeast Asian city-state grew by 3.8 percent last year, according to preliminary figures from the Ministry of Trade and Industry on Tuesday. The government had forecast growth of 3.5 percent, up from 7.6 percent in 2021.

However, growth was held back by a 3.0 percent contraction in the main manufacturing sector in the last three months of the year.

Fourth-quarter growth came in at 2.2 percent, down sharply from 4.2 percent in July-September, according to the data.

Exports of computer chips and other products have been hit by weaker global demand due to rising inflation and sharp rises in interest rates.

The city-state’s economic performance is often seen as a useful barometer of the global environment due to its reliance on trade with the rest of the world.

That warned IMF director Kristalina Georgieva on Sunday 2023 will be a “tough year” for the global economywith a third of economies expected to be in recession.

Singapore Prime Minister Lee Hsien Loong warned in his New Year’s message that growth is expected to weaken to between 0.5 and 2.5 percent this year.

“The international outlook remains turbulent. The conflict between Russia and Ukraine continues with no good outcome in sight,” he said.

Capital Economics said the economy is likely to struggle, meaning Singapore’s monetary authority is unlikely to tighten monetary policy in 2023.

The central bank tightened its currency-based monetary policy four times last year to combat rampant inflationary pressures.

“Looking ahead, we think growth is likely to weaken further. Exports are likely to fall further if, as we expect, the global economy enters a recession in 2023,” said Capital Economics.

“Higher interest rates, declining household savings and high inflation are likely to hurt domestic demand.”

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