Singapore economy to grow by 4-6% this year; 2020 contraction shaved to 5.4%

SINGAPORE – The Singapore economy will grow by 4.0 to 6.0 per cent this year, said the Ministry of Trade and Industry (MTI) on Monday (Feb 15), maintaining its forecast announced last November,  after weighing positive and negative developments in key external economies.

The ministry raised its final estimate for coronavirus-hit 2020, stating that the economy shrank by 5.4 per cent for 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.

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,” it said in a press release issued on Monday (Feb 15).

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 to 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 vaccination programme is also underway, the pace of border re-opening has slowed amidst 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 (e.g., 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 & communications and finance & 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.

For the final quarter of 2020, the economy shrank by 2.4 per cent year on year, an improvement from the 5.8 per cent slump in the preceding 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, following the 9.0 per cent growth recorded in the previous quarter.

More on this topic

Join ST’s Telegram channel here and get the latest breaking news delivered to you.

Source: Read Full Article