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Singapore economy to grow 4% to 6% this year
SINGAPORE: Singapore has maintained its forecast for the economy to grow gradually this year out of its worst recession, and signalled continued support for the unemployed and vulnerable sections of the population.
The economy will grow by 4.0% to 6.0% this year, said the Trade and Industry Ministry (MTI) yesterday, sticking to its forecast announced last November, after weighing positive and negative developments in key external economies.
The higher end of the 2021 estimate would make it the best year since 2011, when gross domestic product (GDP) grew by 6.3%.
However, the growth acceleration this year can be partially attributed to the low base set in the second quarter of 2020 when the economy shrank by 13.3% – the worst in a quarter ever.
The ministry raised its final estimate for the coronavirus-hit 2020, stating that the economy shrank by 5.4%, making it Singapore’s worst-ever recession since independence.
Still, this figure tops the flash estimate of 5.8% given last month and is higher than the 6.25% average for the 6.5% to 6.0% range it gave in November. The economy grew by 1.3% in 2019.
This came about as the economy contracted less than initially estimated in the fourth quarter, shrinking by 2.4% year-on-year, an improvement from the 5.8% slump in the third quarter, and higher than the advance estimate of a 3.8% contraction.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 3.8% in the fourth quarter.
MTI said that since the last Economic Survey of Singapore in November 2020, there has been further progress in the Covid-19 vaccine development and deployment, with several approved vaccines being rolled out in many economies around the world.
“Although the speed of vaccine deployment varies, advanced economies like the United States and the eurozone are likely to reach population immunity by the second half of this year, which should in turn spur their economic recoveries, ” it said in a statement issued yesterday.
“On balance, as the positive developments in the key external economies broadly offset the negative ones, Singapore’s external demand outlook remains largely similar compared with three months ago.”
At the same time, uncertainties and risks in the global economy remain, with significant uncertainty surrounding the course of the Covid-19 pandemic and the trajectory of the global economic recovery, MTI said.
While Singapore’s Covid-19 situation remains under control and its vaccination programme is also underway, the pace of the border reopening has slowed amid the global surge in Covid-19 cases and the emergence of more contagious strains of the virus.
“Against this external and domestic backdrop, the Singapore economy is expected to see a gradual recovery over the course of the year, although the outlook remains uneven across sectors.”
MTI said the outward-oriented sectors –including trade-related services sectors, eg, wholesale trade and water transport – are projected to benefit from the pickup in external demand. The manufacturing sector is likely to expand at a faster pace than previously projected due to robust semiconductor demand from the 5G and automotive markets.
Meanwhile, the information and communications, and finance and insurance sectors are expected to continue to post steady growth, supported by sustained enterprise demand for IT and digital solutions, and credit and payment processing services, respectively.
At a virtual briefing, MTI permanent secretary Gabriel Lim said the pace of Singapore’s recovery is expected to remain uneven across sectors, with the outward-oriented segments – including trade-related services like wholesale trade and water transport – projected to benefit from the pickup in external demand. ─ The Straits Times/ANN