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Economists expect Singapore economy to expand 6.5% in 2021, exceeding official growth forecast: MAS survey

SINGAPORE — The Singapore economy is set to expand by 6.5 per cent this year, higher than the Government’s full-year growth forecast of 4 to 6 per cent, based on a survey of economists by the central bank.

Singapore's economy grew by 1.3 per cent in the first quarter of 2021, after shrinking 5.8 per cent in 2020.

Singapore's economy grew by 1.3 per cent in the first quarter of 2021, after shrinking 5.8 per cent in 2020.

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  • Economists in a Monetary Authority of Singapore survey expect to see a 15 per cent growth in Q2
  • They also expect the economy to grow by 4 per cent in 2022
  • Economists who spoke to TODAY said the more optimistic forecast is driven by a strong rebound in the manufacturing sector
  • It is also in part due to the rollout of vaccines possibly allowing for more activities to resume


SINGAPORE — The Singapore economy is set to expand by 6.5 per cent this year, higher than the Government’s full-year growth forecast of 4 to 6 per cent, based on a survey of economists by the central bank. 

The 24 economists who responded to the survey by the Monetary Authority of Singapore (MAS) said that Singapore could perform beyond expectations with the successful containment of Covid-19 and stronger-than-expected growth in the manufacturing sector.

They also highlighted the prospect of international borders reopening within the year. 

Economists in the the private sector forecast that Singapore's economy would expand by 15 per cent in the second quarter of this year, compared with the same period last year. 

The economy grew by 1.3 per cent in the first quarter, after shrinking 5.8 per cent last year in the country’s worst recession since independence. 

The Ministry of Trade and Industry (MTI) said last month that it would review its full-year economic growth forecast in August. 

The economists forecast that the construction sector would record the largest expansion of 19.3 per cent this year, compared with the same period last year. 

The manufacturing sector is expected to expand by 8.3 per cent, and accommodation and food services by 6.5 per cent, over the same period. 

The economists added that the most likely outcome for the Singapore economy is growth of between 6 and 6.9 per cent this year. 

They also expect the economy to grow by 4 per cent next year, with the expansion most likely to come in at between 3 and 4.9 per cent. 


A majority of the economists (about 77 per cent) said that an escalation of the Covid-19 crisis is the top risk to Singapore’s economic growth outlook.

About 47 per cent of the respondents identified geopolitical risks, including tensions between the United States and China, as a potential hurdle to growth. 

A smaller proportion of the respondents (around 29 per cent) pointed to a slower-than-expected recovery of the labour market as a risk to economic growth. 


Economists contacted by TODAY said that the stronger-than-expected first quarter showing was among the reasons that their forecast for the full year of 2021 was higher than the 4 to 6 per cent official forecast given by the authorities.

The economists surveyed had expected a 1.1 per cent contraction in the first quarter, but the economy really expanded by 1.3 per cent instead.

Economist Song Seng Wun from CIMB Private Banking said that first-quarter growth came primarily from the goods-producing sectors such as manufacturing.

The sector had grown 10.7 per cent in the first quarter compared with the same period last year, more than double the 4.7 per cent forecast by the economists in March.

“There has been strong demand for our key exports, including tech products, semiconductors and consumer electronic products,” he said.

“The manufacturing sector actually recovered to pre-pandemic levels.”

Ms Selena Ling, head of treasury research and strategy at OCBC bank, said that the prospect of more residents getting their Covid-19 vaccinations would also mean that more activities can resume and so, a more optimistic forecast is to be expected.

“The accelerated vaccination supply and pace should provide some much needed comfort,” she said.

Mr Irvin Seah, senior economist at DBS bank, noted that MAS had already said in April that the forecast of 4 to 6 per cent could be a conservative one, and that Singapore’s growth would likely top 6 per cent.

On May 25, however, MTI announced that it would maintain Singapore’s growth forecast at 4 to 6 per cent.

“I suppose because of the implementation of Phase Two (heightened alert), some uncertainties with regard to the eventual impact (of the restrictions) held policymakers back in terms of the official forecast range,” Mr Seah said.


Ms Ling of OCBC said that the heightened alert phase from May 16 to June 13 had led to some uncertainty, with the services sector affected, especially when dining out was banned.

She had initially pegged her forecast at 6 per cent growth this year, but with the announcement of relaxed measures as Singapore moves into the second heightened alert phase on Monday, she has settled on the somewhat more upbeat 6 to 6.5 per cent range.

She had also predicted that year-on-year growth in the second quarter would fall short of the economists’ 15 per cent forecast — to 13 per cent — due partly to the recent restrictions.

“Should there be confirmation that the second quarter proves to be a stumble rather than a halt, especially given the very low base last year, there should be greater confidence that the (growth in the) third quarter and fourth quarter can resume fairly smoothly.” 

Mr Song said that the heightened alert measures, while disruptive, paled in comparison to the economic damage of the circuit breaker that halted non-essential activities in April and May last year.

“Even if there are still restrictions in place limiting some of the consumer-facing activities… there will still be substantial rebounds because last time (during circuit breaker), no one could go out.”

This time round, more activities such as retail shopping and grooming services are open.

Construction projects and road works have also continued, he said, unlike last year when they ground to a halt.

He added that the low base of the second quarter of last year that included the circuit breaker period, when the economy had contracted 13 per cent, will also “exaggerate the year-on-year rebound”.

He had predicted a 6.8 per cent expansion of the economy this year, and 13.5 per cent growth in the second quarter.

Mr Seah of DBS said that the low base from last year meant that on a quarter-to-quarter basis, he is expecting a 2 per cent decline in the second quarter, partly because of heightened alert measures from May 16.

“Before (the phase) was announced, the construction sector was already under a severe manpower crunch, there had been a slowdown in the services sector as well as for manufacturing,” he said.

Mr Seah had forecast a 6.3 per cent growth for this year and a 14.2 per cent growth in the second quarter.


The economists interviewed expect the services and hospitality sectors, which have been hit hard by the pandemic, to potentially take off next year, contributing to their forecasts of 4 per cent growth for 2022.

This forecast assumes higher vaccination rates could mean that activities such as cross-border travel and the resumption of more mass-gathering activities can take place.

“Industries that might have been facing restrictions may see some daylight,” Mr Song said. “It is more of the services sector that will see more recovery.”

Agreeing, Ms Ling said: “Given that services are still very much a mixed bag for now, if the labour market improves and private consumption is stronger, then it would be a good story to tell for 2022.”

Mr Seah, on the other hand, remained less upbeat about next year’s forecast.

“The virus is still mutating, and no one should discount the possibility of more variants,” he said.

“While Singapore is making very good progress with vaccinations, the progress for many countries is a lot slower, and this could derail or delay the resumption of global travel.”

Related topics

economy MAS construction manufacturing Covid-19

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