SINGAPORE: Singapore’s economy expanded by 4.4 percent on-year in the third quarter of 2022, the government said Friday while warning of ongoing global challenges such as inflation.

Economists often see the performance of the city-state’s open, trade-driven economy as a barometer for global trading activity.

The Q3 reading was slightly lower than the previous quarter’s 4.5 percent, according to advance estimates released by the trade ministry.

“The expansion was underpinned in part by a stronger-than-expected recovery in the domestic-oriented and travel-related sectors as more Covid-19 restrictions abroad and locally were relaxed,” the Monetary Authority of Singapore said Friday.

Singapore has removed all Covid restrictions, except for mask-wearing inside buses and metro trains, after vaccinating most of its population of nearly six million and deciding to live with the coronavirus.

On a quarter-to-quarter basis, Singapore’s economy expanded by 1.5 percent, avoiding a technical recession by reversing the 0.2 percent contraction in Q2.

However, manufacturing output and financial services weakened because of softening external demand, according to the central bank.

The MAS said it would further tighten monetary policy to fight inflation — its fifth such move since October 2021.

“In the quarters ahead, the drag on economic activity from the globally synchronized tightening in monetary policy will intensify,” it said.

“While inflation should moderate, it will remain high for some time.”

The MAS slightly raised its inflation forecasts, predicting around 4.0 percent core inflation and around 6.0 percent headline inflation for 2022.

“However, further shocks, including from geopolitical tensions, could drive inflation higher and cause full-year recessions in some key economies,” the bank added.

Singapore’s economy is projected to expand by 3.0-4.0 percent in 2022, after officials trimmed the earlier forecast of 3.0-5.0 percent.