Singapore has always been a role model for the region as well as for the Commonwealth of Nations. A visionary leader laid the foundation for a modern nation out of once impoverished fishing village type of community.
Largely due to its strong fundamentals, the island nation brave many crisis and admirably managed the global pandemic, while maintaining an impressive GDP forecast at 4% to 6 %.
Singapore has maintained its growth forecast for 2021 at a range of 4 to 6 per cent in view of “heightened uncertainties” arising from the COVID-19 pandemic, the Ministry of Trade and Industry (MTI) said on Tuesday (May 25).
The current forecast will be updated again in the next quarter when there is “more data and greater clarity” over the global and domestic economic situations.
This is despite the data showing the economy putting up a stronger-than-expected showing in the first quarter of the year.
Gross domestic product grew by 1.3 per cent year-on-year between January and March, supported by gains in the manufacturing, finance and insurance, and wholesale trade sectors.
This was much higher than the anticipated growth of 0.2 per cent and signaled that Singapore’s first quarterly expansion since the outbreak of the global pandemic a year ago.
Economic growth rate
On a quarter-on-quarter basis, the Singapore economy grew by 3.1 per cent between January and March, also exceeding the advance forecast of 2 per cent growth.
In its report, MTI said the external economic environment has improved since February, despite the pandemic continues to disrupt economic activities throughout the world.
After a stronger-than-expected performance in the first quarter, the domestic economy “should still see a recovery this year” in the context of the global economic rebound and further progress in the local vaccination programme.
However, tourism and aviation-related sectors would not recover soon given the slower lifting of global travel curbs and the recent reduction in capacity limits at local attractions. Activities in these sectors will remain “significantly below pre-COVID levels” even by the end of the year.
The recovery in the construction and marine and offshore engineering sectors will also be significantly hampered by severe manpower shortages. It would further negatively impact on these sectors due to the latest border restrictions and the need to comply with safe management measures.
As there are “significant downside risks”, the Singapore economy may not outpacing the 4 per cent to 6 per cent forecast range for this year.
There are also significant risks and uncertainties, considering the local COVID-19 situation, even though it is “generally well under control” with “good progress” being made with the vaccination of the population.
“These non-economic risks can have a major impact on our GDP growth this year,” the ministry said.
In comparison to Singapore, Malaysian economy is also projected to rebound to 6% in 2021 and then the growth rate would stabilise at about 5.7% whereas UN has projected India, another Commonwealth Country, to record 7.5 % economic growth albeit the outlook is rather fragile given the devastating impact of the global pandemic on the Indian economy. According to latest projections, the New Zealand economy will grow by 4.5 percent in 2021 and 2.9 percent in 2022. These figures are far below the anticipated economic growth rate of Singapore.
Singapore’s performance of its economy against odds that are, primarily, non-economic risks, is an object lesson for larger nations in the region. As we pointed out many times, the country’s secret to success is due to its sound fundamentals, innovate spirit and meritocracy.