The Singapore economy, which marked its worst recession in 2020, may be in for a better-than-expected recovery this year on the back of strengthening external demand.
The Monetary Authority of Singapore on Wednesday said the country’s gross domestic product “could exceed 6 percent” in 2021.
Barring a setback in the Singapore economic recovery or a surge in locally transmitted COVID-19 cases.
Near-term economic prospects have brightened on the back of strengthening external demand, said the central bank in its latest half-yearly macroeconomic review.
“There are upside risks to growth such as from a stronger-than-anticipated upturn in the global electronics cycle, but these are accompanied by downside risks pertaining to the mutation of the virus and efficacy of vaccination,” it wrote.
Uneven recovery in Singapore economy
The Singapore economy contracted by an unprecedented 5.4 percent after a coronavirus-hit 2020 and expectations are for a gradual recovery this year.
Preliminary data for the first quarter of 2020 showed a turnaround after three quarters of contraction, with strong manufacturing activity aiding a 0.2 percent expansion.
The MAS, however, warned that growth is likely to “remain disparate across sectors”.
“The robust GDP estimate belies continued unevenness in the dispersion of the recovery and is accompanied by elevated uncertainty,” it said.
Strong growth is expected for the manufacturing sector, which has been a bright spot over the past year.
As the robust upswing in the global technology cycle continues to boost electronics production.
On the other hand, prospects for the worst-hit sectors, including air transport and accommodation, have “deteriorated somewhat” amid a global surge in COVID-19 infections and the emergence of more contagious strains.
These have diminished hopes for a substantial reopening of international borders in the near term, said the central bank.
Across other sectors, construction activities should be supported by a backlog of projects and an anticipated pick-up in demand this year.
Although manpower shortages and rising material costs are challenges in the near term.
Source: Channel News Asia