Singapore raises 2021 economic growth forecast as Covid vaccination progresses

SINGAPORE — Singapore’s government raised its official growth forecast for 2021 after the economy held up stronger than expected in the first half of the year as the domestic Covid-19 situation stabilizes.

The Singapore economy is now expected to grow between 6% and 7% this year, the trade and industry ministry said Wednesday. That compared with the previous official projection range of 4% to 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 an economic update.

“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,” it added.

Singapore has one of fastest vaccination rollouts globally. Around 72% of the Southeast Asian country’s population has completed their vaccination as of Monday, health ministry data showed.

That allowed the country to start relaxing Covid-19 measures this week, after revising those measures multiple times since May due to an increase in locally transmitted infections — many caused by the more infectious delta variant.

But there remained risks that could weigh down the global economy, said the ministry.

Those risks include uncertainty surrounding the Covid pandemic’s trajectory, higher-than-expected inflation and geopolitical uncertainty involving major economies, the ministry said.

The upgrade in official economic forecast comes as the Singapore economy grew 14.7% in the second quarter of 2021 from a year ago.

That’s better than official advance estimates of a 14.3% expansion, and the 14.2% growth projected by analysts in a Reuters poll.

But compared with the previous quarter, the Singapore economy contracted by 1.8% in the April-to-June period, the trade and industry ministry said.

The ministry added that in absolute terms, the country’s gross domestic product remained 0.6% below that of the second quarter of 2019 — before the Covid-19 pandemic happened.

Here’s how the various sectors in Singapore performed in the second quarter:

• Manufacturing expanded by 17.7% from a year ago, with the transport engineering and precision engineering clusters recording the largest increases in output.
• Construction more than doubled from a year ago, thanks largely to a low base of comparison as most activities were suspended during a partial lockdown last year.
• Services-producing industries expanded by 10.3% from a year ago, with retail trade growing 50.7% on-year.