SINGAPORE: Private-sector analysts have raised their forecast for Singapore’s economic growth in 2021 for the third time this year, according to the latest quarterly survey released by the Monetary Authority of Singapore (MAS).
They expect Singapore’s gross domestic product (GDP) to expand 6.6% this year, slightly higher than the 6.5% estimated in June.
The prospect of reopening borders to international travel was the main driver for optimism and was cited as an upside risk by 70% of analysts surveyed, up from 44.4% in the June survey.
The republic’s effective containment of the Covid-19 outbreak and stronger-than-expected manufacturing growth amid robust global electronics demand were also cited as reasons for the increased optimism.
At the same time, a further deterioration in the Covid-19 situation and associated re-tightening of public health measures remains the most-cited downside risk to Singapore’s growth outlook, with 90% of those surveyed identifying it as the biggest threat.
Respondents also flagged the downside risks from supply chain disruptions, amid a surge in Covid-19 cases due to the more infectious Delta variant, which could constrain manufacturing and trade activity.
Some analysts also raised the possible negative impact of weaker-than-expected growth in China, arising from recent sweeping regulatory clampdowns.
And while the economists lifted their full-year growth projections for the manufacturing as well as finance and insurance sectors, they lowered their forecasts for the construction as well as accommodation and food services sectors that have been dogged by Covid-19 restrictions.
The economists’ raised forecast for the Singapore economy falls within the government’s own upgraded projection. Last month, the Ministry of Trade and Industry lifted its 2021 growth forecast for Singapore to between 6% and 7%, from 4% to 6% previously.
The MAS survey report noted that economic growth in the second quarter came in at 14.7% year-on-year (y-o-y), slightly below the expected 15%.
Survey respondents are tipping Singapore’s economy to grow 7% y-o-y in the third quarter.
The drop from the second quarter’s 14.7% growth is largely due to the base effects a year ago with Singapore suffering its deepest economic slump in the second quarter of 2020 amid circuit breaker measures.
For the whole of this year, Singapore’s manufacturing sector is now expected to expand 11.4%, higher than the 8.3% growth tipped in June. Analysts’ median forecast for non-oil domestic exports for the year was also raised to 9%, up from 7.5% tipped in June.
In the latest MAS survey, the economists’ predictions for overall unemployment rate remained the same as in June at 2.7%.
Inflation, measured by the consumer price index for all items, is expected to come in at 1.7% for the year, higher than the median forecast of 1.4% in June.
The median forecast for core inflation, which excludes volatile accommodation and private transport costs, was lowered to 0.7% from 0.8% previously.
Respondents also cited a tightening in global financial conditions, an escalation in the Covid-19 pandemic and regulatory developments in China spilling over to regional markets as the top three factors which could potentially weigh on financial market and lending conditions in Singapore. — The Straits Times/ANN