Economists raise forecast for Singapore’s 2021 GDP growth to 6.5% from 5.8%: MAS survey, Economy News & Top Stories

SINGAPORE – Private-sector analysts have raised their forecast for Singapore’s economic growth this year to above the Government’s 4 per cent to 6 per cent range, despite the latest round of tighter Covid-19 restrictions.

The Republic’s gross domestic product (GDP) may expand by 6.5 per cent this year, higher than the 5.8 per cent estimated in March, according to the latest quarterly survey released by the Monetary Authority of Singapore (MAS) on Monday (June 14).

This comes after the economy grew by 1.3 per cent in the first quarter when survey respondents had forecast a 1.1 per cent contraction.

Survey respondents expect the economy to grow 15 per cent year on year in the April to June quarter, a robust jump off Singapore’s worst-ever quarter on record last year when GDP plunged 13.2 per cent.

The forecast for growth next year has also been raised to 4 per cent from 3.8 per cent tipped in the March survey.

Effective containment of the Covid-19 outbreak topped the list of factors that could see the economists raising their growth outlook for Singapore.

They also flagged the stronger-than-expected manufacturing sector performance, driven in part by robust global demand for electronics, as a big upside factor.

The prospect of reopening borders to international travel could also be a boon to the economy.

At the same time, deterioration in the pandemic situation and tighter public health measures as a result was the top downside risk to the growth outlook.

The economists polled were also concerned about geopolitical risks, including those stemming from United States-China tensions, and a slower-than-expected labour market recovery, which could weigh on private consumption.

The survey predicts a lower unemployment rate of 2.7 per cent at year-end, down from the 2.9 per cent forecast in March.

The key manufacturing sector is expected to provide an important boost to Singapore’s economy, with economists hiking their 2021 growth forecast for the sector to 8.3 per cent, way above the 4.7 per cent predicted in March.

The forecast for non-oil domestic exports growth was also raised, to 7.5 per cent from 6.9 per cent, reflecting upbeat sentiments for global trade.

Meanwhile, predictions for construction, accommodation and food services – sectors which have been weighed down by Covid-19 restrictions – were lowered slightly for the full year.

Inflation, measured by the consumer price index for all items, is expected to come in at 1.4 per cent for the year, higher than the median forecast of 0.9 per cent in March.

The median forecast for core inflation, which excludes volatile accommodation and private transport costs, was raised to 0.8 per cent from 0.7 per cent previously.

The survey was sent out on May 25. It reflects the views of 24 respondents and not MAS’ own forecasts.