Singapore has maintained its growth forecast for 2021 at 4 to 6 percent, said the Ministry of Trade and Industry (MTI) today (Feb 15).
The economy shrank by 5.4 percent in 2020, slightly better than the advance estimate of a 5.8 percent contraction and above the Government’s forecast range of -6 to -6.5 percent.
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.
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, in turn, spur their economic recoveries, MTI said.
On the other hand, the growth prospects for regional economies such as Malaysia and Indonesia have weakened due to the recent resurgence in infections, which has necessitated the re-imposition of lockdowns and restrictions.
“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 says not everything is perfect
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, while Singapore’s COVID-19 situation remains under control and the vaccination program is 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, MTI said.
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.