Skip to main content




Singapore's 2021 economic growth could exceed forecast of 4% to 6%: Central bank chief

02:16 Min
Barring a setback to the global economy, Singapore's economic growth could exceed the "upper end" of the official forecast range this year, said Mr Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) on Wednesday (Jun 30). Brandon Tanoto reports.

SINGAPORE: Barring a setback to the global economy, Singapore's economic growth could exceed the "upper end" of the official forecast range this year, said Mr Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) on Wednesday (Jun 30).

Speaking at a virtual news conference for the release of MAS' annual report, Mr Menon said the broader economy should recover in the second half of the year, citing strengthening global demand and progress in Singapore's vaccination programme.

"This year is a contest between the virus and the vaccine. The faster we can vaccinate people, the faster we can return to normalcy," said Mr Menon. 

"But if the virus continues to mutate at a faster rate, with new variants that are more infectious, that are probably vaccine-resistant, then we'll have a deterioration in economic conditions," he added.

READ: COVID-19 task force shares broad plan for new normal with possible home recovery and travel


Singapore's official forecast was maintained at 4 to 6 per cent last month in view of “heightened uncertainties” amid tightened measures following a rise in local COVID-19 infections. The forecast will be reviewed in August.

Giving his assessment of the Singapore economy for the year, Mr Menon said the country's economy had, in the first quarter of 2021, recouped the aggregate output loss incurred during the COVID-19 pandemic. 

"The recent tightening of domestic restrictions and border controls will cause a near-term setback to segments that make up about 8 per cent of the economy," he said.

These include retail, food & beverage and land transport services. Travel-related industries such as air transport, accommodation, entertainment and recreation, are also likely to see further delays in recovery, he said. 

The construction and the marine and offshore engineering sectors may be hindered by labour shortages, he added.

Despite the setback to some industries, the economic impact of the current restrictions will be "significantly less severe" than during the "circuit breaker" last year, he said.

COVID-19: What happens when a pandemic becomes endemic?


Responding to a reporter's question on the impact of vaccinations on Singapore's growth, Mr Menon said that Singapore would have "a lot more scope to reopen the economy" once 70 to 80 per cent of its residents are vaccinated.

Referencing authorities' earlier announcements that Singapore may have to live a new normal where COVID-19 is endemic, Mr Menon said: "We can withstand small outbreaks here and there and continue our lives and our businesses as before ... and that's the situation that we are hoping to get to by the end of this year."


His assessment of the global economy was positive, but he also noted that there are "notable downside risks".

The global economy has probably already regained its pre-pandemic level of output and it is expected to expand by 5.8 per cent in 2021, after last year’s 3 per cent contraction, he noted.

"In fact, the global economy could potentially surprise on the upside," he said.

The main downside risk is the emergence of more infectious or lethal virus mutations, while there is also the risk of a sharp pick-up in inflation in the United States.

The rapid pace of economic recovery in the US may result in a "pronounced and persistent rise in prices", said Mr Menon.

Signs that the inflation momentum is too strong could force interest rates up. The "premature tightening of financial conditions" could then trigger increased volatility in financial markets, he cautioned.

"In sum, while the global economy is in a much better place compared to last year, uncertainty remains as elevated," he said.

READ: US economy grows 6.4% in Q1, and it's likely just the start

In Singapore, core inflation should continue on its gradual recovery path, with the 2021 forecast unchanged at 0 to 1 per cent. MAS revised its CPI-All Items inflation forecast to 1 to 2 per cent from 0.5 to 1.5 per cent, due to a sharp rise in COE premiums in the second quarter.

Mr Menon said that while core inflation is rising from a low base, MAS is closely watching developments on global and domestic prices.

"MAS will be alert to any indications of acceleration or persistence in inflation," he said.


He further cautioned that the property market has remained "remarkably resilient" in the face of the pandemic and recession.

While nominal GDP contracted 8.2 per cent last year, the residential property price index rose by 1.6 per cent. In the first quarter of 2021, the index was 5.6 per cent above pre-pandemic levels, even as GDP was about 4 per cent below pre-COVID-19 levels, said MAS.

"MAS, together with MND (Ministry of National Development) and URA (Urban Redevelopment Authority), remain highly vigilant to the risk of a sustained increase in prices relative to income trends," said Mr Menon.

"A prolonged divergence between prices and incomes is unsustainable from a market stability perspective and undesirable from a housing affordability perspective."

When asked later if any cooling measures were being considered, Mr Menon said that the market was currently not "overheated": "We will never tell in advance whether we're going to implement measures - that defeats the purpose of implementing the measures. So stay tuned and just watch, and we hope the market will continue to remain stable."

READ: MAS net profit falls 51% to S$5.2 billion


Last year, the financial services sector grew by 5.1 per cent even as the overall economy contracted. In the first half of 2021, the sector is estimated to have expanded about 6 per cent.

Growth has been broad-based across the financial services sector, and the fintech sector has also continued to do well, said Mr Menon.

Assets under management in Singapore grew by 17 per cent year-on-year to S$4.7 trillion as at end-2020, driven by strong inflows into traditional and alternative investment strategies as well as valuation gains across major asset markets.

The financial services sector has exceeded both the value-added and employment targets set by the Industry Transformation Map (ITM) for 2016 to 2020, said Mr Menon.

Growth in value-added during the five-year period averaged 5.4 per cent per annum, above the ITM target of 4.3 per cent. The sector added an average of 4,700 net jobs per annum, above the target of 4,000.

MAS has started reviewing the ITM strategies and targets for the next five years, he said.

"Technology will reshape financial services in the next 10 years, much more profoundly than it has in the last five years," said Mr Menon.

"Sustainability will become an increasingly central focus for financial services as the world strives towards a low-carbon future."

Source: CNA/hm


Also worth reading