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SINGAPORE – Singapore maintained its forecast that the economy will grow gradually this year out of its worst recession, noting continued support for the unemployed and vulnerable sectors of the population.
The economy will grow between 4.0% and 6.0% this year, the Ministry of Commerce and Industry (MTI) said on Monday (February 15), fulfilling its forecast announced last November, after weighing developments. positive and negative in the main external economies.
The ministry raised its final estimate for 2020, hit by the coronavirus, stating that the economy contracted by 5.4 percent, making it Singapore’s worst recession since independence.
Still, this figure beats the preliminary estimate of 5.8 percent given last month and is higher than the 6.25 percent average for the 6.5 to 6.0 percent range it gave in November. The economy grew 1.3% in 2019.
This came as the economy contracted less than initially estimated in the fourth quarter, contracting by 2.4% year-on-year, an improvement from the 5.8% drop in the third quarter, and higher than the anticipated estimate. of a contraction of 3.8%. .
On a seasonally adjusted quarter-on-quarter basis, the economy expanded 3.8% in the fourth quarter.
MTI said that since the last Singapore Economic Survey in November 2020, there has been further progress in the development and deployment of the Covid-19 vaccine, with several approved vaccines being rolled out in many economies around the world.
“Although the speed of vaccine deployment varies, advanced economies such as the United States and the eurozone are likely to achieve population immunity in the second half of this year, which in turn should stimulate their economic recovery,” he said in a press release issued on Monday (February 15).
However, growth prospects for regional economies such as Malaysia and Indonesia have weakened due to the recent resurgence of infections.
“Ultimately, with positive developments in major external economies largely outweighing negatives, Singapore’s external demand outlook remains largely similar compared to three months ago.”
At the same time, uncertainties and risks persist in the global economy, 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 its vaccination program is also underway, the pace of the border reopening has slowed amid the global increase in Covid-19 cases and the emergence of strains. most contagious of the virus.
“In this external and internal context, the Singapore economy is expected to experience a gradual recovery throughout the year, although the outlook remains mixed across all sectors.”
MTI said that outward-oriented sectors, including trade-related services sectors (eg, wholesale trade and water transport), are expected to benefit from the rebound in external demand.
The manufacturing sector is likely to expand at a faster rate than previously projected due to strong demand for semiconductors from the 5G and automotive markets.
Meanwhile, the information and communications and finance and insurance sectors are expected to continue to register steady growth, supported by sustained business demand for digital and IT solutions, and payment and credit processing services, respectively.
In a virtual briefing on Monday, MTI Permanent Secretary Gabriel Lim said Singapore’s pace of recovery is expected to remain uneven across all sectors, with outward-oriented segments, including business-related services trade such as wholesale trade and water transport will benefit from the recovery in external demand.
Mr. Lim said that most of this year’s economic growth will come from trade and manufacturing, as the pace of recovery in the domestic market-oriented sectors will be more gradual amid relatively moderate domestic private consumption.
“In some cases, private consumption will recover along with the broader economic recovery, but at the macroeconomic level,
a large part of the growth will continue to be linked to what happens in the rest of the world, “he said.
The evolution of the labor market will continue to be a significant drag on domestic consumption, he said.
Kenny Tan, director of the Ministry of Manpower, said that while employment of residents has shown growth in recent months, reducing the unemployment rate, the outlook remains uncertain.
“Some employers will still hesitate to add labor to their costs until they are more confident about the future of their businesses,” he said.
Tan said substantial government support will still be needed to sustain last year’s hiring momentum.
“In the Budget tomorrow you will see what measures we are prepared to introduce this year to boost hiring,” he said.
Lim added that the government remains committed to helping workers stay employed and helping those who may have lost their jobs or are vulnerable.
Edward Robinson, deputy managing director of the economic policy group at the Monetary Authority of Singapore, said the central bank’s policy stance remains unchanged and appropriate despite signs of economic improvement and a rebound in inflation in the country and elsewhere. abroad.
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