SINGAPORE: Singapore has maintained its growth forecast for 2021 at 4 to 6 per cent after an improved earlier estimate for last year’s gross domestic product (GDP), said the Ministry of Trade and Industry (MTI) on Monday (Feb 15).
The economy shrank by 5.4 per cent in 2020, slightly better than the advance estimate of a 5.8 per cent contraction and above the Government’s forecast range of -6 to -6.5 per cent.
Nonetheless, this is Singapore’s first annual contraction since 2001 and its worst recession since independence.
Last week, Prime Minister Lee Hsien Loong said the bulk of Singapore’s economy is expected to recover this year but some sectors – such as transport, tourism and aviation – may take a longer time to do so.
READ: Singapore economy expected to bounce back this year, bulk of it ‘should be able to recover’: PM Lee
MTI said it had taken into account developments in the global and domestic economic environment for the decision to maintain its 2021 forecast range.
For instance, there has been further progress in the development and deployment of COVID-19 vaccines since its last economic survey in November.
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 spur their economic recoveries, MTI said.
On the other hand, growth prospects for regional economies such as Malaysia and Indonesia have 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 to three months ago,” the ministry said in its report.
MTI also flagged several uncertainties and risks that remain in the global economy.
These include significant uncertainty surrounding the course of the pandemic and the trajectory of the global economic recovery, the risk of financial system stresses that could emerge from a protracted economic recovery and continued geopolitical uncertainty involving the major economies.
Domestically, MTI said Singapore’s COVID-19 situation remains under control and its vaccination programme is under way. But the pace of border reopening has slowed amid the global surge in COVID-19 cases and the emergence of more contagious COVID-19 strains.
Therefore 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, it added.
OUTLOOK FOR SECTORS
First, the outward-oriented sectors are likely to benefit from the pick-up in external demand. The manufacturing sector, in particular, is set to expand at a faster pace than…
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