SINGAPORE: Economists have raised their forecasts for Singapore's growth this year, anticipating a firmer improvement in the manufacturing and finance sectors.
Singapore's gross domestic product is expected to increase 5.8 per cent this year, according to the median forecast of 24 economists surveyed by the Monetary Authority of Singapore (MAS).
They had expected 2021 growth of 5.5 per cent in the previous survey in December.
The economists' outlook also improved for the labour market, penciling in a lower overall unemployment rate at 2.9 per cent by the year-end, according to the report released by MAS on Wednesday (Mar 10).
This is slightly lower than the 3 per cent forecast in the previous survey.
The Singapore economy has been hit hard by the COVID-19 pandemic. It logged its worst-ever recession last year even with nearly S$100 billion in stimulus.
Contraction moderated in the fourth quarter as more coronavirus-related curbs were lifted, but expectations are for a slow and uneven recovery.
For the first quarter of this year, the economy will likely remain wobbly, economists in the MAS survey said. They tipped a 1.1 per cent year-on-year contraction with the construction sector remaining the biggest laggard.
READ: Singapore maintains 2021 GDP forecast as economy contracts 5.4% last year, less than advance estimates
As the year progresses, the construction sector is expected to recover, with the economists forecasting a 22.5 per cent growth for 2021. This compares with their earlier estimates of nearly 29 per cent.
Their outlook also dimmed slightly for the wholesale and retail trade which is expected to grow by 4.5 per cent instead of 5 per cent, and for accommodation and private consumption, which is expected to rise 11 per cent instead of 15 per cent.
Similarly, private consumption is predicted to rise 7.9 per cent, down slightly from 8.5 per cent in the survey three months ago.
On the other hand, they expect the manufacturing sector to remain a bright spot for the Singapore economy, with growth of 4.7 per cent. This is an improvement from earlier estimates of a 4.5 per cent growth.
Expectations also improved for the finance and insurance sector at 5.8 per cent, compared to 5.1 per cent in the previous survey.
Non-oil domestic exports is seen rising 6.9 per cent this year, also upgraded from the last 4 per cent estimate.
The economists said an escalation of the COVID-19 situation remained the top downside risk to growth, followed by geopolitical tensions and an earlier-than-expected pullback in macroeconomic policy support globally.
As for upside risks, they include a containment of the pandemic due to quicker vaccine deployment globally, a stronger-than-expected performance from the manufacturing sector, the possibility of borders reopening for international travel and better global growth.
Further ahead in 2022, economists expect that the Singapore economy will grow by 3.8 per cent.
The MAS survey was sent out on Feb 15 to economists in the private sector. The findings do not reflect the central bank’s views or forecasts, it said.