Singapore’s GDP shows signs of recovery, to grow by 4-6% in 2021February 15, 2021
The higher end of the 2021 estimate would make it the best year since 2011, when GDP grew by 6.3 per cent, according to a report in The Straits Times.
The economy will grow by 4.0 to 6.0 per cent this year, said the Ministry of Trade and Industry (MTI), sticking to its forecast announced in November last year, after weighing positive and negative developments in key external economies.
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 per cent – 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 per cent, making it Singapore’s worst-ever recession since independence.
Still, this figure tops the flash estimate of 5.8 per cent given last month and is higher than the 6.25 per cent average for the 6.5 to 6.0 per cent range it gave in November. The economy grew by 1.3 per cent in 2019.
This came about as the economy contracted less than initially estimated in the fourth quarter, shrinking by 2.4 per cent year on year, an improvement from the 5.8 per cent slump in the third quarter, and higher than the advance estimate of a 3.8 per cent contraction.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 3.8 per cent in fourth quarter, according to the Singapore daily report.
The MTI said that since the last Economic Survey of Singapore in November 2020, there has been further progress in 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 US and Eurozone are likely to reach population immunity by the second half of this year, which should in turn spur their economic recoveries,” the ministry said in a statement.
Growth prospects for regional economies such as Malaysia and Indonesia have, however, weakened due to the recent resurgence in infections.
“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,” the report quoted the ministry as saying.
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.
While Singapore’s COVID-19 situation remains under control and its vaccination programme is also underway, the pace of border re-opening has slowed amid the global surge in coronavirus 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,” the daily quoted the ministry as saying.
Jeff Ng, senior treasury strategist at HL Bank Singapore, said the ministry’s 2021 growth forecast reflects caution due to some concerns on major economies that have recently suffered new rounds of lockdowns.