Singapore’s economy grows by 7.6% in 2021; 2022 GDP forecast range maintained at 3% to 5%
Singapore’s economic growth for 4Q2021 – which covers the period between October and December – expanded 6.1% y-o-y, slower than the 7.5% uptick in the preceding quarter.
With this, the republic’s overall Gross Domestic Product (GDP) for 2021 was up by 7.6%, up from 7.1% guided by advance estimates, the Ministry of Trade and Industry (MTI) announced on Feb 17.
The government body also revised its growth figure to a contraction of 4.1%, from the negative 5.4% announced previously.
For 2022, MTI is keeping its growth forecast range at 3% to 5%, despite a slight deterioration in the outlook for external demand.
Many economies have tightened their restriction measures over the past few months, amid a surge in Covid-19 cases caused by the spread of the highly transmissible Omicron variant.
As such, global supply bottlenecks are expected to remain and persist throughout the first half of the year, thus constraining industrial production and Gross Domestic Product (GDP) growth in some external economies in the near term, MTI highlighted in Economic Survey report.
Despite the bottlenecks at ports, the manufacturing sector grew by 13.2% in 2021, accelerating from the 7.5% expansion in 2020.
Output across all clusters within the sector rose, with precision engineering, electronics and transport engineering registering the largest output increases.
The construction sector expanded by 20.1%, a sharp turnaround from the 38.4% contraction seen in the previous year. This follows construction works in both the public and private sector.
Similarly, the services producing industries was up by 5.6% in 2021, reversing from the 5.1% contraction seen in the year before. MTI notes that all services sectors posted expansions with the exception of the administrative & support services sector.
Going forward, “the Singapore economy is expected to continue to expand [in 2022], although the outlook for various sectors remain uneven,” notes MTI.
For instance, the growth prospects for outward-oriented sectors such as manufacturing and wholesale trade remain strong given the continued global economic recovery.
Specifically, the manufacturing sector is projected to continue to expand, albeit at a more moderate pace following the strong outrun last year. This will be supported by sustained global demand for semiconductors and semiconductor equipment, highlights MTI.
At the same time, the ministry says that growth in the information & communications and finance & insurance sectors are expected to remain healthy, on the back of strong demand for IT and digital solutions as well as credit and payment processing services respectively,
Conversely, the recovery of the aviation and tourism-related sectors such as air transport and accommodation, is expected to be impeded by Covid-19 outbreaks and potential virus mutations which could delay the lifting of travel restrictions globally. As such, travel demand is likely to take time to recover, notes MTI.
In the same regard, the accommodation sector is seen to be weighed down by a projected fall in domestic demand as government demand for hotel rooms to serve as quarantine facilities decreases, and staycation demand drops with the relaxation of travel restrictions.
“Overall, activity in these sectors is expected to remain below pre-Covid levels even by the end of 2022,” says MTI.
Meanwhile, the consumer-facing sectors, such as retail trade and food and beverage services, are projected to see a gradual recovery over the course of the year as domestic restrictions are progressively eased, and consumer sentiments improve WITH the turnaround in labour market conditions.
However, MTI says that the real value-add BY the food and beverage services sector and some tourist-reliant segments of the retail trade sector are not expected to return to pre-Covid levels by end-2022, due in part to the slow recovery in visitor arrivals.
Activities in the construction and marine and offshore engineering sectors are projected to continue to recover on the back of the progressive easing of border restrictions on the entry of migrant workers from South Asia.
Nonetheless, as it will take time to fully address the shortfall in labour required to meet business needs, labour shortages are likely to persist and weigh on the recovery of the sectors.
In particular, the output of the construction sector is expected to remain below pre-pandemic levels throughout 2022, says MTI.