Singapore sees 2021 rebound as more stimulus expected

Bloomberg

Singapore reaffirmed its forecast for a rebound in economic growth this year after its worst annual contraction since independence, signalling the recovery is on track while more stimulus expected in this week’s annual budget presentation will provide further support.
The Ministry of Trade & Industry (MTI) maintained its projection for growth in a range of 4% to 6% for 2021, seeing a faster rollout of the vaccine in advanced economies while the US and Europe could achieve population immunity in the second half of the year. Those gains could be offset by a bleaker regional outlook with the resurgence of the virus in some countries.
“The recovery should gain momentum in the second half of the year, assuming that vaccines will become more readily available and global travel can gradually resume thereafter,” said Irvin Seah, economist at DBS Bank Ltd in Singapore. “Overall the economy is on the mend, but growth momentum will remain tepid and uneven.”
The Singapore dollar was up 0.1% at 1.3233 to the US dollar as of 11:12 am local time.
Trade-reliant Singapore took a beating last year, shrinking 5.4%, the MTI said, revising its preliminary estimate from last month for a 5.8% contraction. The aviation, transport and hospitality sectors have suffered from the tourism standstill and mobility restrictions — and are expected to remain weak this year, Gabriel Lim, permanent secretary at the ministry, told reporters — while financial and professional services were more resilient during lockdown and the aftermath.
“There were upward revisions to all sectors, notably in construction and services,” Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore, said of the gross domestic product report. However, he noted, the data have “little implication for monetary policy,” and he expects the Monetary Authority of Singapore (MAS) to remain on hold all year.
The monetary authority, which uses the exchange rate as its main policy tool, affirmed its stance remains appropriate and unchanged, Deputy Managing Director Edward Robinson told reporters. The MAS’s next scheduled policy decision is in April.
Singapore’s daily locally transmitted virus cases have hovered close to zero for the past several weeks, encouraging plans to welcome more visitors this year under varying security arrangements, while others in the region, including Indonesia and Malaysia, are battling surges that are exacerbating their economic pain.
“Singapore’s semiconductor sector is in a very sweet spot,” and a pickup in construction activity could help propel goods sectors in the months ahead, said Song Seng Wun, an economist at CIMB Private Banking in Singapore.