Singapore’s economy will grow 7.2% in 2021

After a bad recession caused by the Covid-19 pandemic, Singapore’s economy closed 2021 with the fastest growth rate in more than a decade.

Singapore’s economy is forecasted to grow by 3-5% in 2022. Photo: AFP

Singapore’s Ministry of Industry and Trade (MTI) announced on January 3 that the economy will grow 7.2% in 2021, the highest level since 2010 and higher than estimates. before.

In November 2021, Singapore’s Ministry of Industry and Trade predicted that the country’s GDP in 2021 is estimated to grow by about 7%, the highest level in the forecasted growth range of 6-7%. In 2020, Singapore’s economy will shrink by 5.4% due to the impact of the Covid-19 pandemic.

In his speech on the occasion of the New Year 2022, Singapore Prime Minister Lee Hsien Loong said that the country’s economy is expected to grow by 3-5% in 2022, similar to the forecast made by the Ministry of Industry and Trade in November. 2021.

In the fourth quarter of 2021, Singapore’s economy grew by 5.9% year-on-year, but lower than the 7.1% growth in the third quarter. In a previous Bloomberg poll, economists forecast that Singapore’s GDP in the fourth quarter of 2021 was estimated to increase by 5.1% year-on-year, and full-year growth in 2021 was estimated at 7.1%.

Analysts say the high quarterly growth above shows that Singapore’s economy has regained its growth momentum, despite a rapid increase in the number of global Omicron variants that forced Singapore to suspend ticket sales on tourist routes. safe (VTL) until January 20.

Selena Ling, Head of Financial Strategies and Research at OCBC Bank (Singapore), said that Singapore’s 2022 growth outlook will depend on a further relaxation of social distancing regulations and enhanced development. launched the VTL safe tourism program to increase the vitality of the service industry, and at the same time alleviate the labor shortage that is adversely affecting the construction industry in this country.

Ms. Selena Ling said that the growth forecast for 2022 by the Ministry of Industry and Trade of Singapore implies that the growth rate of the manufacturing industry will be less prominent, while the service and construction sectors will regain strength.

The recovery of Singapore’s tourism and aviation-related sectors is expected to continue in 2022, despite the previous Ministry of Industry and Trade, said Barnabas Gan, economist at UOB. forecast that business activities for the year will remain below the threshold before the Covid-19 pandemic.

“Last but not least, the gradually Singapore’s easing of domestic restrictions will help create a sustainable labor supply and support labor-intensive industries such as construction,” said Mr.

Manufacturing was the top performer of the Singapore economy in the fourth quarter of 2021, with output growing 14% year-on-year, nearly double the 7.9% growth in the third quarter. For the whole year of 2021, manufacturing production grew by 12.8%, significantly higher than the 7.3% increase of the previous year.

According to the explanation of Singapore’s Ministry of Industry and Trade, the high growth in manufacturing manufacturing in the fourth quarter of 2021 was supported by the expansion of production in industrial clusters. In particular, the electronics and precision engineering clusters continued to record strong output growth, driven by continued growth in global demand for semiconductors and semiconductor devices.

However, Singapore is facing risks that could derail its growth trajectory in 2022. In particular, inflation is a concern when the country’s overall inflation has increased to 3.8%. in November 2021. Previously, Singapore’s October 2021 inflation hit the highest level in more than 8 years after reaching 3.2%. Besides, November core inflation (excluding rent and private trucking costs) increased to 1.6% from 1.5% in October.

A slowdown in the economy of China – Singapore’s largest trading partner – and a new wave of Covid-19 spikes are other potential risks that could derail Singapore’s growth trajectory.

Singapore currently has one of the highest vaccination rates in the world, with 87% of the population fully vaccinated against Covid-19 and around 40% vaccinated.

Singapore’s Prime Minister Lee Hsien Loong said the country can be “quietly confident” that it can cope with the effects of the Omicron variant, although it is not yet completely out of the woods. Mr. Lee Hsien Loong also assessed that Singapore’s current position has been “greatly strengthened” compared to two years ago in the context of increasingly improved vaccination rates, including vaccination for young children.

After recording thousands of infections in the past few months due to the Delta variant, the daily number of Covid-19 infections in Singapore has dropped to a few hundred cases in the past week. Hospitalization and intensive care admission rates have also decreased.

“We expect Singapore’s economy to remain open in the first quarter of 2022 as hospitalizations decrease and more people receive booster shots,” said Dr. Chua Hak Bin, co-director of macro research at Maybank Kim Eng Financial Company (Singapore).