SINGAPORE: Singapore’s economy is set to expand at a faster clip than the government previously expected as the city state shakes off an uptick in virus cases and looks to reopen more sectors through year end.
Singapore revised its forecast for annual economic growth to 6%-7%, the Trade and Industry Ministry said yesterday as it reported final second-quarter data.
In its initial second-quarter gross domestic product (GDP) report last month, the agency had left the annual forecast unchanged at 4% to 6%.
Among nine economists surveyed by Bloomberg who updated their Singapore GDP forecasts this month, six saw growth exceeding 6%.
“Barring a major setback in the global economy, the Singapore economy is expected to continue to see a gradual recovery in the second half of the year, supported in large part by outward-oriented sectors,” the ministry said in a statement accompanying the data.
“The progressive easing of domestic and border restrictions as our vaccination rates continue to rise will also help to support the recovery of our consumer facing sectors and alleviate labour shortages in sectors that are reliant on migrant workers.”
Singapore has remained a relative bright spot in South-East Asia as the Delta variant rips across the region, severely threatening economies that are struggling to boost their vaccination rates.
Thailand reported a record high in daily virus deaths Tuesday, with Malaysia also recently setting new daily case records.
The Singapore dollar was largely unchanged after the data, at 1.36 to the US dollar as of 8:37am.
Singapore has fought some pockets of the delta variant over the past few months, but officials have allowed for further easing of restrictions given the city state’s vaccination rate, with 70% of the population now fully inoculated.
In a speech Sunday night on the eve of the country’s 56th independence day, Prime Minister Lee Hsien Loong said residents could “look forward to a careful, step by step reopening of our economy.”
“Singapore’s smaller second quarter contraction and brighter outlook for the third quarter boost the economy’s prospects for 2021 presenting upside risks to our forecast for 6.2% growth in 2021.
“With 70% of the population fully vaccinated earlier than targeted, the government already started to peel back virus curbs on Aug 10, and will further ease restrictions on Aug 19.
“Activity should gain significant momentum once herd immunity is reached in early September, allowing full reopening,” said Tamara Mast Henderson, Asean economist.The stronger GDP forecast is based on the assumption that the city state’s vaccination rate will continue to improve from the current 70%, and that its borders will gradually reopen toward the end of the year, according to the Trade and Industry Ministry.A faster reopening and relaxation of virus curbs in the third quarter “could bode well for consumer spending and hence domestic-oriented services,” said Selena Ling, head of research and strategy at Oversea Chinese Banking Corp in Singapore.
What would be key is the recovery in the domestic labour market and the 2022 core consumer price index expectations that could pave the way to monetary policy normalisation.
Source: https://www.thestar.com.my/business/business-news/2021/08/12/singapore-raises-2021-gdp-estimate-expansion-at-6-to-7