OUE Commercial REIT - Annual Report 2021

INDEPENDENT MARKET REVIEW ECONOMIC OVERVIEW Gross Domestic Product (“GDP”) Growth, Unemployment and Inflation Global economic growth surged in 2021 as the relaxation of COVID-19 pandemic-related measures in many countries helped boost demand. The Singapore economy, with its heavy reliance on global trade, benefitted from this recovery. According to the Ministry of Trade and Industry (“MTI”), the Singapore economy grew by 7.6% year-on-year (“YoY”) in 2021, rebounding from the 4.1% contraction in 2020, and is the fastest growth pace in over 10 years. In absolute terms, 2021 GDP has exceeded pre-COVID levels in 2019. All three main sectors of the economy, namely the manufacturing, construction and services industries, recorded output growth for 2021. The construction sector recorded the strongest growth of 20.1% YoY in 2021 due to the low base set in 2020 when construction activities were severely curtailed by COVID-19 safe management measures and outbreaks in the workers’ dormitories. The manufacturing sector grew by a robust 13.2% YoY in 2021, extending SINGAPORE By JLL the 7.5% YoY growth in 2020 while the services sector rose 5.6% YoY in 2021, reversing the 5.1% YoY contraction in 2020. Recovery in the services sector was led by the information & communications, finance & insurance, and professional services segments, which collectively grew by 7.7% YoY. The information & communications segment continued to benefit from strong demand for information technology (“IT”) and digital solutions as well as robust games and software publishing activities. The finance & insurance sector was bolstered, in part, by increased fund management activities. The labour market tightened in 2021 alongside Singapore’s economic recovery with the progressive resumption of more business activities. The overall seasonally adjusted unemployment rate fell from its peak of 3.5% in September 2020 to 2.4% in December 2021, based on preliminary estimates. Overall inflation climbed 2.3% in 2021, the highest level in eight years, amid high energy prices, global recovery of demand for commodities and persistent supply chain disruptions. Economic Outlook Singapore’s economic prospects in 2022 remain largely intact despite the emergence of the Omicron variant in late 2021. The economic recovery is expected to extend to the domestic-oriented and travel- related sectors this year as safe management measures and border restrictions are progressively eased. But downside risks such as new COVID-19 variants and geopolitical uncertainties involving major economies could overshadow the recovery of the global economy. Barring fresh disruptions, the MTI expects Singapore’s GDP to continue to grow at a more moderate pace of 3.0% to 5.0% in 2022. On the back of the healthy economic growth, Singapore’s labour market is also projected to continue its recovery trajectory in 2022. Recovery is likely to remain uneven, with growth continued to be led by sectors such as the information & communications, professional services, and financial services sectors. For 2022, the Monetary Authority of Singapore expects overall inflation to average between 2.5% and 3.5%. Upside risks driving inflation include further pandemic-related or geopolitical shocks to global supply chain activities and strengthening wage pressure. 01 Source: Department of Statistics, Oxford Economics, JLL Research, 4Q 2021 01 Real GDP Growth, Inflation and Unemployment Rate 2016 2014 2015 2012 2013 Total Unemployment Rate Inflation Real GDP Growth 2021 2019 2020 2017 2018 2024F 2022F 2023F 8 6 4 2 0 -2 -4 -6 (%) 52 O U E COMM E R C I A L R E I T