The Southeast Asian city state’s economic performance is often seen as a barometer of the global environment because of its reliance on trade with the rest of the world.

The financial centre also has one of the busiest ports in the world which serves as a key link between Asia and the rest of the world.

In his annual May Day message, Lee said there is hope inflation will let up in the second half of the year and that retrenchment numbers “remain manageable”.

“But our external environment remains volatile, fraught with serious geopolitical tensions,” Lee warned, pointing to the risk of recession in the west, where interest rates continue to be hiked to tame inflation.

“The multilateral trading system is being progressively undermined by growing nationalist and protectionist sentiments, affecting international trade and cooperation.”

Singapore’s economy expanded 3.6% in 2022, slowing from the 8.9% growth in 2021.

The Monetary Authority of Singapore has said the financial hub’s GDP is expected to grow between 0.5% and 2.5% this year.

The city state will have to adapt to the economic disruption of emerging industries and technologies, Lee added.

“Singapore’s survival depends on us staying open and doing business with the world,” he said.

“This means continually transforming our industries, enhancing existing capabilities and building new ones as we move into growth markets.”