Strong positive forecast of 5.8 per cent growth in Singapore’s GDP on the heel of Australia’s economic recovery and rebound indicates, in no uncertain terms, that small, but, significant City State is about to recover and regain its preeminent position in the region as a financial and commerce hub.
Apart from financial services and robust Financial Sector, Singapore’s Manufacturing Sector also makes a substantial contribution to the City State’s GDP.
According to Singapore’s Ministry of Trade and Industry (MTI), the Manufacturing Sector grew by 10.3 per cent year-on-year, extending the 11.0 per cent expansion in the third quarter.”
The increment and expansion in the Manufacturing Sector was supported by output expansions in the electronics, biomedical manufacturing, precision engineering and chemicals clusters, which counterbalance the output declines in the transport engineering and general manufacturing clusters.
Positive forecast
While raising this year’s forecast of Singapore’ economic growth, economists expect an impressive improvements, particularly, in the country’s Manufacturing and Financial Sectors.
According to the median forecast of 24 economists surveyed by the Monetary Authority of Singapore (MAS), this year’s Singapore’s GDP is expected to reach 5.8 percent.
In previously conducted survey in December, they (Economists) predicted that the expected 2021 growth would be at 5.5 per cent. Among other Sectors, the labour market would also improve and the unemployment rate would be at 2.9 per cent. The figure is slightly lower than 3 per cent predicted in the previous survey.
The Singapore was hard hit by the global pandemic, plunging the city state into the worst recession in the known history of the nation. The Singaporean government introduced a gigantic stimulus package of nearly S$100 billion to kick start the stalled economy.
As lockdowns were eased and more and more coronavirus clusters busted out, contraction moderated. However, the expectation of speedy recovery were all-time law and expected recovery would be both slow and uneven.
It is expected that the economy would be shaky for the first quarter of this year and tipped a 1.1 per cent year-on-year contraction with the construction sector remaining the worst affected sector of the economy.
However, the sector would rebound and would expect to record a 22.5 per cent growth for 2021. This is in contrast to the earlier estimates of around 29 per cent.
The wholesale and retail trade is also expected to record a relatively law grow of 4.5 per cent and not 5 per cent as earlier predicted. The accommodation and private consumption is expected to rise 11 per cent, instead of 15 per cent.
In the same manner, private consumption which is predicted to increase up to 7.9 per cent, would, in contrast to the forecasted 8.5 per cent three months ago.
The manufacturing sector is to be expected to remain robust for the Singapore economy, with a higher growth of 4.7 per cent, an improvement from earlier estimated growth of a 4.5 per cent.
Meanwhile the finance and insurance sector is also expected to record 5.8 per cent growth, compared to the 5.1 per cent growth in the previous survey.
Among the other sectors that have been given an upgraded forecast is Non-oil domestic exports which is on the rise with 6.9 per cent growth this year. This is also an upgrade from the last 4 per cent estimate.
Some of the risks expected are the possibility of worsening the COVID-19 situation, geopolitical tensions and unexpected withdrawal of global macroeconomic policy support.
The other factors that would act favorably for steady economic growth are quick vaccination, robust manufacturing sector, borders opening up for international travel and tourism.
According to the survey, the Singaporean economy is expected to record 3.8 per cent growth by 2022.
Positive forecast and the expected leap forward of Singaporean economy could be attributed to its strong fundamentals and sound fiscal policies that always encourage Foreign Direct Investments (FDIs), ensure investment security, competitive tax regime as well as facility to repatriate profits. These are some of the factors that made, once an impoverished fishing village-like city state, a role model in the region.
Singapore’s hybrid approach to economic growth, diversifying sectors that fuel growth such as Trade and Manufacturing, maintaining healthy balance of payments and reserves virtually made the Singaporean economy resilient even in the face of insurmountable odds such as a global pandemic.
