Photographer: Lauryn Ishak / Bloomberg
Photographer: Lauryn Ishak / Bloomberg
Singapore confirmed its forecast for a recovery in economic growth this year after its worst annual contraction since independence, indicating that the recovery is on track, while more stimulus measures expected in this week’s annual budget presentation will provide further support.
The Department of Trade and Industry on Monday maintained its growth projection within a range of 4% to 6% for 2021 and saw faster roll-out of the vaccine in advanced economies, while the US and Europe could achieve population immunity in the second half of the year. the year. These gains could be offset by a bleak regional outlook with the virus resurgence in some countries.
“The recovery should gain momentum in the second half of the year, assuming vaccines will become more readily available and global travel can gradually resume thereafter,” said Irvin Seah, economist at DBS Bank Ltd. in Singapore. “Overall, the economy is recovering, but growth momentum will remain lukewarm and uneven.”
To look up
Singapore is recovering from its worst contraction since independence
Source: Singapore Department of Statistics, Ministry of Trade and Industry
The Singapore dollar rose 0.1% at 1.3233 against the US dollar as of 11:12 a.m. local time.
Trade-dependent Singapore was hit last year with a 5.4% contraction, MTI said as it revises its preliminary revision last month’s estimate for a 5.8% contraction. The aviation, transportation and hospitality industries have suffered from the standstill of tourism and mobility restrictions – and are expected to remain weak this year, Gabriel Lim, permanent secretary at the ministry, told reporters Monday – while financial and professional services have been more resilient during lockdown and aftermath.
“There were upward revisions in all sectors, particularly construction and services,” said Khoon Goh, Asia Research Director at Australia & New Zealand Banking Group in Singapore, the gross domestic product report said. He notedthe data has “little impact on monetary policy” and he expects the Monetary Authority of Singapore to remain on hold throughout the year.
Budget to pay
The monetary authority, which uses the exchange rate as the main policy tool, confirmed its position appropriate and unchanged, Deputy Director Edward Robinson told reporters Monday. The next planned policy decision of the MAS is in April.
What Bloomberg Economics Says …
“The year-over-year decline of the Singapore economy in 4Q has slowed much more than initially estimated. However, without a significant recovery in activity in the second half of the first quarter, we still expect the contraction to continue into the first quarter of 2021. “
– Tamara Mast Henderson, Asean economist
To read the full note, click here
Daily locally transmitted virus cases in Singapore have been close to zero in recent weeks, encouraging plans to welcome more visitors under various security schemes this year, while others in the region, including Indonesia and Malaysia is facing spikes that exacerbate their economic pain.
Read more: Singapore sees people traveling this year as vaccines roll out
“Singapore’s semiconductor industry is in a very good place,” and an increase in construction activity could help boost the goods sectors in the coming months, said Song Seng Wun, an economist at CIMB Private Banking in Singapore. “With modern services likely to do even better this year, I keep my fingers crossed that there could be an upside surprise” on the government’s growth forecast.
Economists in a Bloomberg poll predict that Treasury Secretary Heng Swee Keat will again announce a budget deficit when he reveals details on Tuesday’s budget for the upcoming financial year, which is expected to include targeted support for vulnerable households and businesses.
Read more: Singapore to reduce budget deficit to 4% of GDP in FY21: survey
The Singapore government said last week that the five stimulus packages announced in 2020, coupled with a loose monetary policy, have saved the economy from a contraction of 12.4% or more last year.
Other details
- The ministry also released final economic forecasts for the fourth quarter, which showed GDP growing a non-annualized, seasonally adjusted 3.8% over the previous three months, better than the estimated 2.4% and the previous projection of 2 , 1%. It fell 2.4% year-on-year, ahead of the expected 3.6% contraction
- Industry contracted 1.4% in the fourth quarter from the previous three months, services up 4.1% and construction up 55.6%
- In a separate report on Monday, Enterprise Singapore said it sees growth in non-oil exports in a range of 0% to 2% in 2021, after increasing 4.3% in 2020.
- Inflation could increase in the second quarter based on statistical base effects, MAS said
– With the help of Chester Yung, Myungshin Cho and Tomoko Sato
Adds analyst comments in the third and ninth paragraphs, updates the currency level.